Book summary of Compelling People – The hidden qualities that make us influential By John Neffinger and Matthew Kohut

SUMMARISED BY PAUL ARNOLD: STRATEGIC PLANNER, FACILITATOR, TRAINER (paul_arnold@me.com)

THE BOOK IN A NUTSHELL

A Harvard Business School recommended reading book.

Displaying warmth with strength is key to making us more influential. Most men have perceived strength, women warmth. But we need both for successful relationship in both business and in life.

You can’t fake it. It must come from ‘inside-out’. We need to build our own self-belief that we have the skills and strategies to cope with most things that are chucked at us in life. From this inner strength of self-belief, it allows us to relax and let our warmth and strength shine through.

The book introduces us to a key concept of the inner circle: We can most effectively persuade when we are accepted ‘within the circle’ — i.e. that we have understanding and empathy for their position (warmth). Only then can our argument be listened to (strength). They define three steps: Acknowledge, Empathise then Lead.


THE BOOK

Strength and warmth are key attributes that define the quality of our relationships with others. They have archaic roots, dating back to our pre-ancestors (friend or foe)?. These reactions still happen today (research suggests we decide the warmth of another person in 1/10th of a second). Also we can be strong in some areas and weak in others. Both can be developed and improved.

Warmth

Warmth is the perception someone cares for us. They listen, understand us, even empathise with us.

We distrust people’s motives who lack warmth. They put us on our guard and we try to avoid them.

Warmth ironically comes from strength. If we feel strong and able to cope, we are able to feel much more relaxed, and so allow the warmth to naturally exude. If we feel threatened, our warmth is hidden away. Again we need to build warmth inside out. No amount of ‘faking’ it will hide how we really feel about a person. If we want to be warm towards someone we need to focus on what we like about them (ignoring what we do not like).

Strength

Strong people exude a sense of inner ability, strength and confidence. We can be influenced by them and follow them (so they are often in leadership positions). But strength alone is not the key to leadership. Without the warmth we may respect them, but we may not like nor trust them.

A lot of strength derives from testosterone. Higher levels leads to increased confidence, risk taking and aggression. Cortisol counterbalances testosterone (Cortisol being the chemical of anxiety) undermining our confidence. Conversely, testosterone can act as an inhibitor of Oxytocin (one of the key chemicals of warmth).

Warmth with Strength

We need both to be effective. Too much Strength creates fear, distrust and separation. Too much warmth creates a perception of weakness.

Relative and contextual qualities of Strength and Warmth – These qualities are relative. A person might be warmer than another, but colder than a third person. Likewise, if someone is perceived as ‘strong’ then they are likely to be also perceived to be ‘less warm’. Indeed, if two people are going for a job, one will be unconsciously labelled ‘the strong’ one and the other ’the warm’ one.

Warmth and strength are contextual. We want more warmth in social situations and more strength in the workplace

Stereotypes – We make instant assessments of people on this Strength/Warmth matrix. We will assess people through our own personal historic perspective. If we favour one over the other, this will influence what we see. Men are presumed strong (and colder), Women are presumed warm (and weaker). Both sexes get rewarded and accepted for this dominant trait. It’s more acceptable for a man to demonstrate dominant behaviour and for a woman to be more emotional.

When we break these stereotyped expectations we are often seen as an outsider, a maverick — even odd (cf David Bowie). Culturally, there appears to be greater tolerance of men being warmer than women being stronger. Women who are strong are seen as cold, callous and often resentful. Thus, society can ‘punish’ people for breaking conventions. Conversely, when a man becomes a father they gain the added kudos of increased warmth (without it affecting their perception of strength).

Many American’s disliked Hilary Clinton’s strength (at one time she was the butt of more jokes than anyone else and was nicknamed ‘Chillary’). The most profound shift came during the New Hampshire primaries when she demonstrated a vulnerability not previously displayed (“So as tired as I am — and I am…and as difficult as it is to carry on…”)

Building Relationships – The book suggests three strategies:

Strategy #1 – Be assertive, but not angry – Anger is not an expression of strength but a sign of weakness (as out of control). Assertiveness is about responding, where the feelings are contained and channeled.

Strategy #2 – Getting tough for the sake of good of others – There are very few incidences where anger is condoned (especially with women) but one of them is where the person is standing up for others (rather than for themselves) on things like values or higher level principles — thus, a person is allowed to be strong when it is a selfless act.

Strategy #3 – Dial up the warmth, not tone it down – Our current society is increasingly valuing warmth. The book suggests that we need to amp up our opposite force if we want to be effective. If we want to increase our perception of strength, we need to increase our warmth. Strength comes from warmth. Warmth comes from strength.

Factors that drive perception of our strength and warmth

There are many aspects that help define our perceived strength and warmth, many we can play with to improve our perceived strength and warmth. For example, Culture, Sex, Race, Age, Body shape, Gait, Energy levels, Facial movements/shape, Eye movements, Language, Tonality, Accents, etc are all cues that we unconsciously pick up on as to a person’s strength and warmth. A few specifics worth mentioning:

Cultural differences – We also need to be aware of cultural sensitivities. What is appropriate in one market would be very wrong elsewhere, or with a different person/age/sex/religious persuasion?

Colour – Sadly, black women in positions of authority have little room for error (as they break the socio-sexual conventions). It appears Black women leaders are criticised more than black men or white women.

Stereotypes – Stereotypes stick, hence the headline, ‘Why Obama doesn’t dare become the angry black man’. Martin Luther King’s non violent protest was driven by his understanding that angry (black) people give away their respect and hence influence when they appear to ‘lose control’. Dignity and restraint are always more powerful weapons against mis-justice.

Disability – Disability can swing both ways. On the surface it projects weakness. However, the resilience and perseverance of overcoming a disability is often seen as a great strength.

Body shape – Body movement likewise convey a lot. If a person feels weak and anxious, they tend to lean away, cross their arms, shrink their shoulders, rub their hands together or touch their face. In this sense the body cannot lie well. We are unconsciously communicating all the time.

Posture – The military and ballet both teach people the fundamental importance of strong posture. Research has shown that merely adopting different postures can change our emotions (as seen by levels of testosterone)

Gait – A relaxed, longer, graceful gait with head up and shoulders back all adds height and hence stature (versus a short, pacy gait, with the head low, and shoulders cramped over).

Hand movements – The weak handshake (with no eye contact) creates a poor first impression. Likewise, limp wrists suggest weakness. Karate chops and pointing demonstrate strength. The warmest hand gesture is arms open wide, palms up (literally welcoming with open arms). Similarly the most powerful hand position is to metaphorically cup a ball between our waists and hips, slightly held away from the body.

Touch – Touch is a sign of warmth/confidence. Modern day cultures (of fist hits, chest bashing etc) are also signs of warmth/strength.

Face – There are 43 muscles in the face and so is the best place for displaying warmth or strength. Ekman found that we all share the same facial expressions for various emotional states — irrespective of our cultural backgrounds. A grimace or head position (e.g., ’looking down our nose’ at others) reduces perceived warmth but may increase strength cues. Conversely, a slight head tilt to one side increases warmth. Likewise, soft eyes and a wide longer lasting smile (we can all detect a fake smile as the eyes need to smile as well).

Eye contact – Eye contact is a critical way to convey both strength and warmth. When people cannot hold eye contact for long it suggests diffidence. A high status person of strength may use lack of eye contact to convey disdain (to further build their superiority). That said, in many parts of Asia, too much eye contact can also signal lack of respect.

Voice – The voice conveys a lot of emotion. Again different pitches, loudness, tonality, fluidness, and speed all provide cues to a person’s warmth and strength. The advice is that when we want to hit home with a key thought, to slow down and really enunciate the words with a slightly raised voice.

Words – Agreeing with another person’s and using their same words helps build warmth (disagreeing is often seen as a sign of strength/power play). Overuse of filler words (such as “umm” and “you know..”) detracts from a person’s perceived strength. Using “we” conveys warmth, whilst “I” suggests strength.

Language – We can bolster our verbal strength through a number of language techniques. Use of metaphors/analogies demonstrate our verbal prowess; as does deductive thinking (through the use of ‘If..then…’ etc). Other techniques include repetition, alliteration and word play (especially if locked into patterns of three: “Of the people; by the people; for the people”). Famous quotations also helps project an aura of knowledge and hence strength.

Humour & Storytelling – Storytelling as well as humour are powerful influencers as they combine warmth and strength. Research has indicated that we are wired for stories. They are easier to remember and a joy to hear. Yet they both carry hidden inner meaning that gets absorbed straight into the unconscious mind.

Inside-out – These non-verbal cues are hard to mask, so it’s best not to try to fake it. In reality, we need an inside-out approach. Only if we feel authentically warm to another person, or internally confident, will the non-verbal cues be aligned.

Assessing our warmth/strength

We believe our success comes from our own innate skills and that our failures come from external factors.

Self analysis – We need to undertake a bit of self analysis. Look at photos of yourself (especially the more natural ones). How do you come across? If you met a person with that look, what would you assume they would be like? Also ask friends, relatives and work colleagues. Quickly you will start to build up a profile of where you lie on the two axes. The reality is we are all imperfect — but that does not mean we cannot improve.

Confidence – We do not need to be totally free of all issues in the past to raise our self-confidence but we do need to be able to manage better our emotions. To do this, we need to re-examine the meaning we put on events/people, so we can react in a more ‘adult’ manner. It is recommended to ‘future pace’ events that could come up to practice how we would react. Many top sportspeople use visualisation techniques to better master their future performance. When unsure, we need to refocus on the task and why it is important for us. This adds greater resolve. Another technique is to take bite size chunks, starting first on smaller interventions, to slowly build up our confidence. The more often we ‘cope,’ the greater we build our belief system that we can cope again in the future with bigger, more threatening situations.

Persuading

The best way to persuade is from the inside in person’s safety circle. The authors propose three steps: Acknowledge, Empathise and then Lead.

The circle

When Robert Kennedy heard the news of Matin Luther King’s death, he gave a powerful speech that quelled the anger and violence in the city of Indianapolis.

1) Acknowledge – Kennedy first acknowledged their feelings. He said, “You can be filled with bitterness, and with hatred and a desire for revenge”. In other words, he connected with where they were right now (you can only move people if you acknowledge where they are right now).

2) Empathise – It’s not good enough to just acknowledge how they feel. We need to the say how we also share the same feelings. Kennedy identified with them (referencing how his own family had suffered murders by white men). By doing this he put himself inside the circle — to be with them, not outside of them. He found a shared point of connection so they saw him as part of them. Hence the circle. People will only listen to people they see to be ‘inside the circle’. So people will see us as either inside the circle or outside it. Bringing our own real life experiences here is critical. ’I know how you feel – I have been there myself’ is in essence what we need to convey to be listened to. Thus we first connect through warmth. The heart needs to open to make the ears open. If Kennedy had started from a place of strength, and tried to suggest a different interpretation of the events he would have been lynched. We often make this mistake by leading on strength but this alienates. Only through humility and empathy can we build the rapport necessary to allow us to later-on start to lead with advice (i.e. Pace. Pace. Pace…then lead).

3) Lead. Only after building rapport couldKennedy then start making suggestions of the type of country America needed to become. Obama did the same. On one occasion, Obama was arguing against the second amendment. First he got inside the circle by acknowledging the right of Americans to carry a gun. He then cleverly pushed the NRA out of the circle by suggesting the NRA was not like them (“They believe any constraint or regulation whatsoever is something they have to beat back. And I don’t think that is how most firearm owners think”.)

Leo Tolstoy once wrote, “ The most difficult subjects can be explained to the most slow witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows without a shadow of doubt what is laid before him”. Thus we must first start with their ‘map of reality’. This is particularly effective if they assume we have a counter point of view.

This also stops the argument (as when argument starts, persuasion stops as argument just pushes us back into our corners). MRI scans show how we only pick up on messages that supports our point of view (We see what we believe – Ed). The best way to persuade, is to keep things non- confrontational (because as soon as the lines are drawn, the barriers come up). Keep pointing out the common ground. We need to keep warmth high, to allow the strength of our argument to be heard.

Strength and warmth in the world

Work – People are unconsciously cultured into the strength mantra in their workplace, suppressingany emotions and so (often mistakenly) giving up on warmth. We are beginning to see a shift towards warmth, especially in the newer start up companies.

Managing others – In managing others it is better to do so from a place of warmth not strength. Warmth is a more respectful and conducive way to get things done — not threats and aggression.

Sales – Salesmen often use both strength and warmth to get the sale. They start all warm, then become tough.

Marketing – Brands likewise try to project a clear personality that often lies on the strength versus warmth matrix (cf Ariel = strength, Persil warmth – Ed).

When things go wrong – It requires warmth of humility and contrition, followed quickly by the strength of how we are going to resolve the situation.

Relationships

Many men find happiness to be the most important trait in women, and women find confidence to be the most important trait in men (put in another way: confidence makes a man look attractive and warmth makes a female attractive). Woman want a man to project strength (warm strength not aggressive strength). Men want warmth from women.

A lot of this is conveyed through non verbal cues when we first meet someone. A smile starts a conversation. It says, ‘I’m safe’. The unspoken rule for women is to be the gatekeeper at every stage. She ‘allows’ progression to the next stage; whilst the man’s role is to proactively knock on every gate to be invited through. The man pushes his luck and the women sits in judgment of his efforts until she is won over. Whilst this is becoming more fluid, it is still more common than the reversal of these roles. The role of the man to make the move is actually about him demonstratinghis strength through confidence and courage: Fortune favours the bold.

When men are attracted to another person, they often adopt peacock like positions: Chest out, standing tall or spreading wide to demonstrate their strength and stature. The female response is conversely one of weakness: falling under the ‘strength’ signals to express unconsciously her ‘acquiescence’ — the bashful pose, head cocked to one side, eyes dropped into submission (called the ‘duck and peek’), or even at a later stage ‘bedroom eyes’. The classic exposing the neck when the head goes down is a classic sign of ‘submission’ to a more dominant force. The other alternative is extended eye contact (that can suggest both strength and warmth) and of course touch.

Negotiators on the other hand want everyone to get along (often sacrificing personal wants). They are good listeners and very attentive to other people’s feelings. They avoid conflict and can acquiesce — hence they are seen to be high on warmth but low on strength. Fischer found that Explorers tend to make better long term partners with other Explorers. Likewise, Builders. However, Directors tend to get on better with Negotiators (and vice versa).

On the rocks – Gottman from Washington devised a test that led to a 95% accuracy in predicting if couples would be together still after 15 years. It appears there are four ‘deadly horsemen’ that led to failed relationships: Criticism, Defensiveness, Stonewalling and Contempt. Criticism creates counter criticism, leading to defensiveness, which then leads to the person essentially ignoring the other person. Stonewalling shows lack of respect (by refusing to acknowledge the other person and their point of view). The final deadly twist is contempt, as the body language screams out, “I hate you!”. Conversely, a lot of long-term relationships are built on mutual respect and trust.

Child rearing – There appears to be two different models of child rearing (often linked to different cultures and generations). There is the strength model. Maintaining strict rules and discipline, with little room for love, and positive support. Then there is the much more liberal, permissive empathetic approach. Both can lead to ill-balanced children. However, it is suggested there is a middle ground called authoritative parenting — it’s both warmth and strength together. To pull this off, parents need to first learn how to manage their own emotions (as kids model their parent’s behaviour).

SUMMARY

If we feel strong, we do not feel threatened and so can relax and be warm. Strength comes from confidence in our ability. Warmth helps us connect. For us to fully engage with others, we need first to be strong inside. There is a great power when both warmth and strength work together. People then have ‘presence’. We have deeper relationships with those around us and achieve much more. This results in a positive spiral up.

CRITIQUE

This is one of those books whose simplicity is alluring, but when we peak behind the curtain, we realise it’s just a clever ‘top dressing’ that masks a mass of complexity. So many factors influence both of these qualities. Hence the ‘solution’ (i.e., how do I become warmer and/or stronger) is equally complex and opaque. The reality is this notion of ‘inside-out’ probably takes years with a Psychotherapist than an afternoon with this book.

This is a ‘light’ book. It is full of common truths that at best bore, and at worse irritate (such as the long winded section about face, hair, voice, clothes, shoes etc). I honestly can say I did not enjoy reading this book.

The circle idea is, I think, the strongest concept in this book.

Like so many books, it falls into the trap of trying to support its hypothesis by demonstrating its ubiquity across everywhere. The trouble with this strategy is often they start skating on thin ice. Instead of adding further support to their theory it starts to undermine it.

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Book summary of ‘Leaders eat last – Why some teams pull together and others don’t By Simon Sinek

Leaders eat last

SUMMARISED BY PAUL ARNOLD: STRATEGIC PLANNER, FACILITATOR, TRAINER (paul_arnold@me.com)

The book in a nutshell

We achieve so much more when we work together. Yet our obsession with ever-shortening financial goals is making us lose-sight of what is really important — the employees. Leaders are creating a caustic environment that is killing co-operation. 

Chemicals control our emotions and hence our behaviour. Endorphins, Dopamine, Serotonin, and Oxytocin help push us to achieve things (together). However, financial driven goals linked to bonuses are pushing our behaviour into competitive, isolationist behaviours which triggers the over-secretion of Cortisol (which effectively closes down our immune systems). 

Leaders therefore need to create Oxytocin infused organisations that stimulates collaboration.

The book

Leadership

Trust – Successful organisations have a strong culture create trust amongst its members.  

Trust is the most important quality any person or organisation must have to maintain long-term relationships. Trust is like a lubricant. It reduces friction and increases performance. However, it’s very easy to break trust. Critically, leaders need to understand the importance of people and relationships to achieve their vision.

In August 2002, in Afghanistan, Captain Mark Drowley (nicknamed Johnny Bravo) performed a ‘let down’ in his A10 attack aircraft (where they fly close to the ground in range of enemy fire, to ascertain the movements of the troops). When asked afterwards why he decided to do such a brave move, he simply replied. “Because they would have done it for me”. His heroic attitude and actions are part of the military’s culture.

In the days of the industrial revolution (and after), people were treated like machines. Clock in. Clock out. Emotionless. Just a constant drive for higher productivity. So it was at Hayssen Sandiacre. When Bob Chapman took over the ailing company, he saw the workers joking together in the tea room, but lose all their lifeblood when they went back into the factory (80% of people surveyed by Deloitte’s were dissatisfied with their jobs). He wanted them to enjoy their time at the workbench and not just in the canteen. He listened to the workers describe how they were not trusted, were watched and monitored all the time. Chapman recognised the need for greater humanity in the workplace. He allowed the workers greater autonomy, treating them with dignity, respect and trust. This changing attitude helped increase turnover from $55m to $95m.

Culture – A culture is often described as the hidden hand of control. Staff unconsciously follow the values, beliefs and ‘ways of doing things’ of an organisation. When the culture is strong, it guides behaviour (and vice versa when the culture is weak). A key role of leadership is to maintain/develop a strong culture. Cultures that solely reward financial achievements shift the organisation away from its values. Bad cultures breed bad leaders and hence, bad employees.Weak cultures make people do what is right for them and not what is right for the organisation.

‘Long term greedy’ is how a past employee coined the way Goldman Sachs operated. Goldman Sachs had a very strong culture in the past. People had to be a high standard of character to be accepted into the firm. In 1999, they went public, leading to an explosion in financial innovation. A new type of aggressive trader came in. The company’s culture started to shift. Old company values (such as ethics) got swept to one side by the allure of rapid profits and eye-watering bonuses; people were pitched against each other leading to low trust, low respect and low accountability. The environment was one of ‘win at all costs’ — even of it meant squashing their co-workers. The culture had turned ‘toxic’.

Vs…

In November 2008, terrorists raided the Taj Mahal Palace Hotel in Mumbai with automatic weapons, killing 31 people. Employees risked their lives to save their guests, forming human rings around them, and returned back inside to help rescue other guests. The culture was totally geared to putting the guests first. When recruiting, they class empathy and respect higher than academic grades.

Parent-Leader – To be put in charge of someone is a special gift. Like a parent, a manager/leader is responsible for developing their potential. We should treat our employees as if they are family.  When the going gets tough at home, we see it through thick and thin — together. In work we should sacrifice the numbers to save the people — not vice versa.  When you stand behind your people, they stand behind you. If you grow your people, you grow your numbers.

Leadership requires a commitment and constant attention to managing the dynamic ecosystem of teams. It takes time. Like a parent they have to make personal sacrifices for the common good of the organisation.

Charlie Kim of Next Jump has instituted a Lifetime employment policy — i.e. no-one gets fired — they just get coached. He says you would never fire your kids, so why fire your people? This led to a massive change in the culture. People started communicating more openly. Mistakes and problems were pointed out quicker, and productivity shot up. Average revenue has grown by 25% every year since.

Lead the people, not the numbers – Leadership is about taking responsibility for lives not just numbers. Lives are, after all, more important than numbers. The reality is, if we look after the people, the numbers will take care of themselves. 

With an eye only on short-term wealth, leaders cannot hope to inspire confidence as the quickest way to increasing profit is reducing cost. Furthermore, with the eye-watering explosion of bonuses to senior Directors, it is no surprise this policy still continues. Our new obsession with shareholder wealth is killing the ‘golden-goose’ of employee collaboration.

Empowerment – The strength of a leader needs to be measured as much by the legacy s/he leaves behind them. Research shows that organisations led by an empowering leader outperform ‘directive style leadership organisations’ as a higher level of team-learning, empowerment and collaboration is built into the culture. Good leadership is like exercise. You will not see an immediate improvement, but it will pay-off in the long run.

Captain David Marquet was a distinguished sub-marina, who was put in charge of USS Sante Fe (which was ranked last in the Navy metrics). One day, he issued a command, “Ahead two-thirds”. However no change was made. When he asked the helmsman why no change was made, the deputy replied that on this vessel there was no ‘two-thirds’. When Marquet challenged him why he accepted the order, the office replied, “Because you told me to”.  He noted that people at the top have all the power but none of the information (and vice versa). This triggered a whole new way which he managed the submarine. Instead of a top-down command system, he empowered all staff with the power of making the right decision. Leaders were addicted to power and control. The language was changed from “Sir, Request permission to…” to, “Sir, I intend to…” This way the person now owned the action. This massively built morale and bridged a new quality of relationship. Sante Fe then cruised up to becoming the best rated crew in all Navy history. Captain Marquet comments, “The goal of a leader is to give no orders. Leaders are to provide direction…and then allow others to figure out what to do”. A leader’s role is to help develop their teams to make better quality decisions.

The malaise of abstraction (To see, to touch, to feel, to care) – The greater the detachment

 the greater the abstraction. If we don’t know them, we don’t care for them. So as companies become bigger and more global, so the people who operate the purse strings do not care about the individual. The less you know someone, the easier it is to make them redundant (or fail to promote/give them pay rises etc).

In 1961, Stanley Milgram invited people (supposedly randomly) to be the teacher. The teacher sat in a room, with a microphone and speaker, and a large shock generator. In another room was another subject who was subjected to increasing intensity shocks if they got answers to questions wrong. It was up to the teacher to deliver these shocks in 15 volt increments up to a supposed 450 volts. The question was, would a person follow orders from an authority figure (a man in a white coat) and deliver life threatening shocks? Sadly many people did (65% when in a separate room). In one variation the supposed learner (victim) sat next to the teacher. In these situations, the level of compliance was significantly lower. The more you know/see/feel a person the more you will care for them. Physical presence creates deep emotional bonds.

Numbers of people aren’t people. They’re just numbers. “The death of one man is a tragedy. The death of a million is a statistic” said Joseph Stalin. The greater the distance from any individual, the less we care. The same goes with number as physical space.

James Sinegal was the co-founder of CostCo. He saw his employees as ‘family’ and rewarded loyalty and trust. He encouraged a collaborative culture where everyone ‘looks out for each other’ rather than being in competition with each other. In 2009, there was a drop in sales by 27%. Unlike other retailers also caught up in the recession, he decided to raise salaries rather than cutting them as he realised his staff needed more help in hard times, not less.  “Wall Street is in the business of making money between now and next Tuesday. We’re in the business of building an organisation, an institution that we hope will be here in 50 years from now”. CostCo therefore has a higher than average loyalty levels and have a policy of promoting from within (2/3 of Managers first started as cashiers) – Customers will never love a company until the employers love it first.

The curse of isolation at the top – Power often shuts the leader off from the world. Paranoia can often set-in, with the leader believing that everyone is against them. They then create extra barriers with people and processes to protect themselves, further exacerbating the separation from reality. Ultimately the organisation suffers.

Ethics – If there are no regulations, people lose sight of morals. Whenever we have seen a ‘relaxing’ of rules (in the false belief of improving the freedom of commerce) we have seen organisations push quickly into that space i.e. it is not ethics that holds people back. It’s the law.

Bank of America tried to charge their customers $5 per month to use their credit cards. After an angry outburst from its customers, it reversed its decision. Rather than admitting it was a mistake, they tried to justify it (even spinning different stories to the financial community and another to the public), pouring further fuel onto the fire of outrage and mistrust. 

Vs….

Ralph Lauren’s Argentinian division was found to be giving bribes/incentives to government officials to speed through shipments. When central Head Office found out, instead of trying to cover it up, they self-reported it to US authorities. In the end they were fined $1.6m — but it was ‘good value’ as it helped protect (even enhance) their reputation. 

These may both be small examples but often they are a testament to how the organisation operates overall. As the Zen Buddhist saying goes, ‘How you do anything is how you do everything’.

Carrot versus the stick – Bosses may have some call of authority and order over their employees, but the stick is less powerful than having an inspiring purpose to chase. The carrot is ultimately more powerful. Companies need to re-axis themselves. Profit merely allows them the ability to do what they really want to do. Often there is higher ambition in serving the needs of others than in merely serving ourselves. Costco and SouthWest Airline are two classic examples of organisations who put their staff first, customers second and shareholders third. It is only by successfully serving the first two, can the third be fed. Setting goals of being the number one… merely serves oneself. We must set our vision/purpose towards serving others first.

Psychological safety

Circle of safety – We all perform better when we feel safe. When threatened, we close down, become defensive, agitated, stressed and aggressive. It saps our energy and our spirit. The reason why homo sapiens dominated the planet is because they worked together. Not only can we protect all our families from external threats, but with more hands and minds, we can achieve so much more than we ever can alone.

When an organisation/department creates a ‘circle of safety’, we dramatically increase the energy, trust, happiness, productivity and mutual support for each other. We are more open and hence more creative. We share ideas, and build on others suggestions. We feel valued. When we give out trust and respect to others, we engender it back towards us. When a team feels connected and understood, they will rally round each other, supporting and building the team.  Not only is productivity exponentially enhanced, but loyalty also increases. Thus the primary role of a leader is to create a culture of safety. As the organisation grows, so s/he needs to ensure the circle of safety is maintained.

Co-ompetition – Many misguided leaders believe that creating internal competitive pressure is good for driving performance. It’s the complete opposite.  When we feel threatened, we close down, we do not share, we become defensive and selfish. We create factions and hostilities that drains the energy of the people and ultimately, the organisation. Instead of focusing on the common good, we focus on our personal survival. This ‘infighting’ means we cannot ‘fight’ as effectively against the outside forces — thus we are more likely that the organisation weaker.

Ill-health – Lack of psychological safety leads to high anxiety, triggering major health issues. Ironically, in a world where the average person has more than any of their ancestors, very few people feel fulfilled in their lives. Feelings of isolation, loneliness and depression are epidemic. It is fuelling a growth in self-help and therapies in all shapes and sizes. Partly this is due to the caustic work environments. Organisations are not designed to get the best out of people.

In 2011, a study conducted by Canberra University revealed that that a job we hate can seriously damage our health. Levels of depression and anxiety were greater than those not in work. They traced this stress and anxiety less to the work itself and more to weak management and leadership. Another study by University College London found that those who did not feel recognised for their work suffered higher levels of stress leading to increased heart disease. The reason for this was a lack of control over a large chunk of their lives. An American survey in 2013 concluded that when bosses ignore us, 40% disengage from work. Trouble is, emotions are contagious (misery loves company). When someone starts moaning at work, it soon spreads like wildfire.  

The Whitehall studies were set up to investigate the relationship between stress and the hierarchy in a company. The discovered that stress did not come from the greater seniority you had, but the reverse. Lack of control in their workplace was the primary creator of stress. Higher-up, you are more self-determining. Lower down you are told what to do every minute of the day.  Stressed-out senior executives were living longer as they had much greater autonomy over work. Workers lowest in the hierarchy had a premature death rate four times higher than senior executives. They also saw much higher levels of mental illness.

Home balance – If we have a psychologically healthy home life, it can help balance the deleterious effect of a stressed-out work environment. Sadly, research shows when we have a dysfunctioning work place, we take our stresses home with us (and that starts to poison our home-life).

A study by Boston College found a child’s well-being is less influenced by the long hours the parents worked, and more by the mood the parents were in when they came home.

Change – Sir Isaac Newton’s second law of motion states, f=ma: force = mass times acceleration. To move a large company (mass) requires a huge force. The trouble is, many change programs are often counter productive. They create massive unease and fear, reducing the sense of psychological safety. So rather than helping make people work closer together, it makes people focus on self survival ( and a mass desire to return to the status quo). We need to re-look at the equation f=ma –  Acceleration has been forgotten about. We can shift a large mass either by applying a large force or by doing it slowly. Small changes over a longer period of time will often be more successful as slower change can be more easy absorbed ‘safely’ by the organisation.

The chemicals the drive our emotions and behaviour

Emotions are our primary drivers of behaviour. And our emotions are triggered by chemicals in the body. There are four primary chemicals that control our positive emotions of happiness, pride, connectedness, love etc: Endorphins, Dopamine, Serotonin, and Oxytocin (EDSO). Serotonin and Oxytocin help steer us toward making decisions that support the group as opposed to purely selfish acts. Endorphins and Dopamine tend to support more selfish, survival instincts (like food, shelter, warmth etc). Cortisol is the opposite, readying us for attack/defence.

Endorphins – Endorphins are the runners high. They serve to hide pain with pleasure. You can develop a craving for the ‘high’ endorphins deliver after a hard workout. In this sense they are the reward to make us take-on hard challenges.

Dopamine – Dopamine is also a reward for a job well done. It’s that elated sense of pride we have having finished a task. Dopamine is highly addictive and keep us wanting more (especially since its effects do not last long, propelling us to the next ‘high’). Hence the problem with cocaine, nicotine, caffeine, alcohol, sugar, sex, gambling, shopping etc. — they all cause the release of dopamine. Newness also triggers dopamine (hence our addiction to our mobiles). 

The clearer and more visual the objective/vision, the more dopamine that gets secreted— It’s a mini reward/taster of the future feeling we can look forward to once completed. Then we get slightly more doses of dopamine as we get closer to the end, thus keeping us on track.

Serotonin – Serotonin and Oxytocin grease the social machine. Serotonin is the leadership chemical. It fills us with pride. It makes us feel strong and confident. It’s the feeling we get when others value us and our contribution. 

Oxytocin – Oxytocin is the chemical of love. It’s the feeling we get when in the company of the people we are really close to. It rewards us for being social. It makes us feel accepted. Oxytocin relieves stress, boosts our immune system, increases our interest in work and improves our cognitive skills and creativity. It also increases our libido. 

Oxytocin is contagious. The person who does the act of kindness gets a shot of Oxytocin. The receiver gets a dose — and the people who saw it also get a boost. This helps connect everyone together. 

Cortisol – If Oxytocin helps boost the immune system, Cortisol strangles it. Interestingly Cortisol actually inhibits the secretion of Oxytocin, the chemical that is responsible for empathy.

Cortisol is part of the defence system in our body. When the body detects a perceived danger, Cortisol is activated, which in turn tiggers adrenalin. Between the two of them, they close down all periphery systems (including our immune system) allowing focused activity of flight or fight. This archaic response mechanism was fine when we could meet a sabre-tooth tiger, but not so relevant in the corporate environment. The trouble is, our body cannot detect the difference so over-reacts. If we live in an environment (be it work or home) where there is constant criticism/judging, there is a sense of insecurity (as Google call it, Psychological safety – Ed), then our body moves into a state of ‘high alert’. If we are in this environment day after day, our bodies are in a constant state of cortisol over-dosing. Cortisol plays havoc with our digestive system and blood glucose level. It increases our blood pressure, inflammatory response and also impairs cognitive judgment. Cortisol also increases aggression and suppresses our sexual drive — no wonder so many people are ill at work.

Working together

Collaboration – Most of the great things achieved in life are done by teams of people and rarely by sole individuals working alone. So our true greatness will come from working well with other people rather than from our own brilliance. Yet we are living in a time where we are creating environments that make it harder and harder to co-operate with others. 

We need to move to a place that supports team work. We need to encourage trust and respect in each other. Thus, a supportive and well-managed workplace is better for one’s health. Autonomy and self determination breeds health and happiness (hence why there is greater job satisfaction amongst the self-employed).

People tend not to leave a bad job. A study in 2011 revealed that up to one-third of all people surveyed wanted to leave their jobs but only 1.5% actually did. It’s like many a bad relationship: Even if they don’t like it, they don’t leave.

Tough times – Poverty drives togetherness (wealth drives independence and isolation). Our ancestors learned that in times of adversity, working together helped them not only survive but thrive. We do not face the same dangers as our ancestors. We face different ones. During challenging times, we are more likely to survive if we work together. Ironically adversity often brings the best out in people.

3M’s culture revolves around innovation. 3M achieves this through a culture of  collaboration and sharing — which is rewarded (‘Innovation through interaction’ is one of their mottos, with 80% of its patents having more than one inventor). “At 3M we’re a bunch of ideas, we never throw an idea away because you never know when someone else will need it”.

The increasing destabilisation people are living with these days means there is even greater need for people to create safer, trusting, more supportive and collaborative circles. It’s better for our health (married people live longer than singles as they help support each other). Whenever we feel a real bond of trust and support from other people, it gives us the power to endure.

Collaboration through friendship – Only when we get to meet people properly, listen to what they have to say, try to understand their position, and seek a shared higher objective, can we hope to work better together. 

During the 1960’s, 1970’s and 1980’s, Congress mostly functioned well. The Democrats and the Republican’s worked well together behind the scenes to make things happen. Many of the politicians on different sides were personal friends and this helped to allow courteous grown-up conversations to take place. George McGovern (D) would harass Bob Dole (R) during the day, but then be seen drinking with him in the evening. Likewise, Tip O’Neill (D) and Bob Mitchell (R). That was the way business was conducted in those days. In 1994, The Republican Party took control of the house with Newt Gingrich as the speaker. He decided to shake things up. He instituted a policy that Politicians should spend an increasing percentage of their time back in their constituencies. This had unexpected consequences. The politicians spent less time meeting each other outside of work. This broke down the social cohesion that oiled the delicate power balance, resulting in conflict and a slowing-down of passing bills. People lost sight of the bigger benefits to society and instead got dragged back down into petty party politics. In January 2013, a public survey revealed an approval rating for congress of just 14% — below even second-hand car salesmen.

Esprit de corps – When asked, ‘What was one of your best days at work?’, it’s rarely the work itself. More often, it’s the camaraderie within group that is most fondly recalled. It can often be when a project has gone wrong. Our best days are when we helped each other overcome hardships. Working late, all pulling together — floods our body with oxytocin — rewarding us for collaborating.

Connecting emotionally – Emotional connection is critical. Not just positive emotions as demonstrated above but also negative ones. When people have been through a highly emotional event together (be it a new business pitch, a crisis, a project rushed through etc), it really helps bring people together. Likewise physical closeness breeds community (it’s more difficult if the team are spread around the world or in different buildings or on different floors). Furthermore, the frequency of meeting each other is also key to cementing that community.

Trends that caused the lack of psychological safety

1) The ‘me’ generation – After the second world war, optimism, and wealth dramatically increased.  People who delayed having children, could start laying down roots for their future generations. All told, 76 million people were born — a rise of 40% (this population bulge got nicknamed the ‘pig in a python’ as it moved along the snake as they aged). This generation were born into a time of growth and prosperity. Their parents often given them the things they never had. Thus unconsciously these parents bred a generation of ‘takers’ not ‘givers’. The baby boomers were given so much stuff they got addicted to the dopamine hit. Abundance breeds selfishness and laziness. The more we have the more we want, and the more we expect (ironically, the more we have the less we value it). Thus when the baby boomers came into ‘power’, they set-up systems and borders to protect what they had.

2) When firing became the norm – On August 5th, 1981, President Reagan ordered the firing of 11,359 air traffic controllers in a dispute over pay and conditions. This seismic action defined a new standard of behaviour: it was okay to get rid of people. After that, the practice of laying-off staff became accepted policy to manage profit. Careers were ended to make the finances work. The unwritten contract between employee and owner was being ripped up. Trust was shredded. 

Jack Welch, CEO of GE would fire the bottom 10% of his Managers who were not contributing to brand share growth, gaining him the nickname, ‘Neutron Jack’. With such high profile actions, such behaviour soon spread. People were seen as a commodity, less an asset. On the surface, his strategy appears successful (GE sales rose from $26.8b to $130b), but digging deeper, we see the increase was in-line with overall stock market growth (A rising tide lifts all ships). Welch later-on called the single number focus on shareholder wealth “The dumbest idea in the world”.

3) The shift to profit as the most important factor – Milton Friedman, the highly influential economist, said there was only one responsibility for a company — and that was to increase profit (within the rules).  So we saw a shift from organisations as social institutions to becoming purely focused on financial gain.  

Meckling and Jensen, two academics, wrote a paper in 1976 about shareholder value. This also contributed to the shift towards senior executives’ bonuses being directly linked to share price. What you reward is what you get. 

With the financial markets now demanding quarterly reporting of increased profits, the pressure is constantly growing on business leaders to drive these profits at almost any cost. We are losing the social ethics and morals of businesses. We are increasingly seeing companies exploring tax loop holes and ‘bending the rules’ (with supposed head offices in Ireland , etc.). Enron imploded over serious fraudulent activities. BP caused the deaths and contamination of a whole ecosystem because it put profit above safety.

20 April 2010, BP’s Deepwater Horizon oil rig exploded, killing 11 people and causing five million drums of crude oil to leak into the Gulf of Mexico. By 2005, the Deep Water Horizon oil rig was $58m over budget and was costing an extra $1m a day. During three years prior, BP had racked up 760 safety violations. Profit trumped safety. The reality was this was short-term thinking. In the end, the disaster cost BP $24.4bn in fines and costs (let alone share price dropping from $59.88 in March 2010 to $40 in Feb 2013 – $39.59 in Dec 2018).

Strategies to rectify

So how does a leader go about rectifying the situation? Sinek proposed five strategies:

  1. Bring people together
  2. Keep it manageable — obey Dunbar’s number
  3. Meet the people you help
  4. Give people time, not just money
  5. Be patient — the rule of seven days and seven years

Rule 1: Bring people together – As great as the internet is to help connect communities, it cannot create deep trusting relationships.  You can’t build meaningful business relationship either over Skype calls. There is no such thing as ‘virtual’ trust. This has to be done face-to-face. There is a magic that happens when we listen, talk, touch a person for real.

We can say the cruellest things to people when distanced from us — things you would never say to a person face-to-face For example, 25% of all American teenagers claim to have experienced cyber bullying.

Rule 2: Keep it manageable — Obey Dunbar’s number of 150 – The number comes from research conducted by the British Psychologist, Robin Dunbar. Communities start to fall apart above 150 people. The earliest tribes of Homo sapiens maxed out at around 150 — the same with the Bushmen of Africa. The Marines keep their companies below 150. Above that, it’s impossible to know everyone. Communication is easier and quicker when the numbers are kept lower. This ‘knowing’ each other is the glue that creates a community. When we ‘know’ who is in the community, we build trust with each other as well as a deep sense of identity. And this identification breeds self-protection of that community. We look after our own. The more we know each other the greater the ties of trust and loyalty. 

Thus, it’s key for any leader to create a real sense of identity for people to coalesce around and see themselves as ‘one’. Socials, Management walkabouts and engaging with people outside of meetings all play a critical role in helping to knit a community together. If we don’t do this, people will splinter off and will not feel connected (that’s why working remotely/from home causes some problems). 

Gore Tex will build another factory rather than let staff exceed 150

Rule 3: Meet the people you help – Only when you really meet your customers face-to-face, does the impact of the work your organisation does really sink-in. This is significantly more powerful than any powerpoint presentation full of facts and figures about them.

Wells Fargo invited in real customers to explain what difference their loan had made to their lives. It had a profound impact on their staff. Their perspective changed from ‘hitting the numbers of loans’ to ‘helping people in their lives’. This in turn impacted the quality of interaction with their customers.

In one experiment, simply showing the photograph of the patient to the Radiographer significantly improved their diagnostic accuracy.

Rule 4: Give them time, not just money – The trouble with money is it’s relative. $100 to one person is a lot. To another it’s nothing. But time is finite. Giving away some of your time is so much more valuable than giving money. We judge a boss (or any person) by the quality and quantity of time they give to us. Undivided real attention suggests you really care. It acknowledges and validates them.

Rule 5: Be patient – We live in a dopamine fuelled, speed obsessed world of ‘Now’. However, building trust takes time. Most great things can’t be rushed.

Critique

The book makes compelling reading but I’m left with the question, ’Is it an impossible quest that everyone will find happiness in their jobs?’

The book has a tendency to overdo the negativity of the future scenarios. Read this book and you think the world has gone to wrack and ruin. It’s easy to cite individual instances of where profit focus has caused major problems. But of course there will be equally as many great examples of organisations who also pray at the altar of shareholder value and still do great things and are wonderful places to work (are these not some of the key principles/benefits of Capitalism)?

The book is repetitive, and meanders into other areas (such as societal issues). Frankly the book should stick to its core thesis around organisations. It’s caught in the classic malaise of having a key hypothesis (that could be summarised in 20 pages that’s gets dragged out to fill over 220 pages — because that’s the accepted minimum length of business books).

Finally, the fault of all these books is they try to simplify management/leadership down to one key precept. Which we all know is nonsense!

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Book summary of THE POWER OF HABIT Why we do what we do and how to change – by Charles Duhigg.

The power of habit

SUMMARISED BY PAUL ARNOLD: STRATEGIC PLANNER, FACILITATOR, TRAINER (paul_arnold@me.com)

THE BOOK IN A NUTSHELL

We live in unconscious habits. These most of the time are beneficial and help us short circuit complexity in decision-making. However, sometimes we get caught into negative habits. The book suggests a simple model to help us understand the forming and breaking of habits: Cue -> Routine -> Reward.  The best way to switch a habit is to stick with the same cue and reward but substitute the routine.

THE BOOK

General principles about habits

We live in patterns of behaviour – Research by Duke university has found that over 40% of our behaviours are driven by habits. Habits saves us energy. It creates effortless behaviour.

Habits make for easier decision making – Habits help remove unnecessary decision-making as it takes standard activities and creates short-cuts. Habits reduce the amount of cognitive activity the brain needs (as shown through brain activity scans), allowing the brain to be more engaged in other areas.

Unconscious behaviour – The reality is very little of our behaviours are controlled by our conscious state of thinking. Even if we are aware of the behaviour, we find it very difficult to stop it (as the conscious brain does not have control over that ‘department’.)

Behaviours become self-perpetuating –  Once you have done something one way, then it is more likely you will do it the same way next time. So to build a habit, keep doing it.

Small rewards can create big habits – Only if a behaviour gets rewarded will we use that behaviour pattern again. if it keeps rewarding us then we keep on using it, until it becomes engrained as a habit.

Easy come/hard to go – Habits are fairly easy to develop but devilishly hard to stop. Sometimes it’s easier to develop a new habit than change an older, less healthy one.

The habit cycle – There are good habits and bad habits. Each of these live in a simple cycle: Cue -> Ritual -> Reward. If we can understand what these three  components are in any situation, we  can change behaviours.

 

Habit cycle

Making new feel like old – Habits take time to develop and you need to support it to ensure it grows. So how do you get people to stay with something unfamiliar? You need to clothe it in familiar stuff long enough for it to become familiar.

Making new feel like old – During the second world war, quality meat for the masses was scarce. So, the US government had to think of ways of getting people to eat organs (liver, kidney, heart etc). The key was to dress the unfamiliar in familiar clothing. Thus, they developed old recipes with these new meats such as steak AND KIDNEY pie.

Sandwiching new in the middle of old – ‘Hey Ya! ‘by Outkast became a massive hit in the summer of 2003. But it took time for the record label Arista to master its success. Radio stations use algorithms to forecast listener’s habits to create their play lists to keep listeners tuned in. Hit song science has deconstructed a new song to predict its likelihood of success. ‘Hey Ya!’ was one of the best performers ever. However, when played out, listeners hated it so much, 1/3rd of people tuned to a different station! That was because it was too different from the stuff that was being played. Thus, they needed to get people used to its difference by sandwiching it between two sticky songs such as ‘Breathe’ by Blu Cantrell (a ‘sticky’ song is one where there is no station change during its playing). That way, people were ‘softened up’ to the song, allowing it to grow on them.

Identity – We become what we constantly do: Identity drives behaviour and behaviour drives identity. Habits create consistent behaviour. And consistent behaviour starts to influence identity (cf the occasional runner who then runs more frequently until they redefine themselves as an athlete). Likewise, negative behaviours also get locked-in through identity. When in groups we identify with, we are very likely to follow the behaviour of that group.

Cultural derived habits – Culture can create the unconscious rules of a society that guides behaviour. This therefore creates habits often through rituals (cf the Church or Alcoholics Anonymous). So, shifting the culture can influence behaviour and instil new habits.

The power of weak ties – Research has shown that we tend to do more for weak ties (i.e. 1-2 people removed – friends of friends) as we want to remain bonded to the stronger ties who are connected to those weaker ties. It’s to do with a sense of social obligation.

The power of weak ties – Rosa Parks protest on the bus in Alabama in December 1955 was not the first of such insurrections. The reason it took off and helped prick a nation’s conscience was the power of her connections across multiple groups. This meant her support rapidly spread. She had what sociologists call ‘weak ties’. They deeply cared for her so were prepared to get involved. People who jump from one network to another are actually more powerful than those at the heart of one group.

The power of weak ties – Rick Warren created one of the largest Christian communities in the world (in Saddleback). He built it from nothing but its success was from encouraging people to take part in small groups. Every new member was assigned to a small group that met every week (they have over 5000 groups). It’s the social pressure of weak ties in these small groups that created the obligation to attend. This transformed people’s behaviour into habits.

Life stages shift behaviours –  The most common reason that creates a habit switch is a change in life stages – e.g. going to college, marriage, losing weight, pregnancy etc. Thus, if you catch people at these life changing stages, offering them enticing promotions, you can potentially install new habits to shop with you for their changing needs.

Life stages triggers new habits – A father was incensed that his daughter was sent special offers on maternity products. Later-on it became clear that she was indeed pregnant. The offers were based on her past purchase habits and web-site searches. Target identify a person based on buyer data (credit card, loyalty card, voucher redemption etc.) and then track their purchases, building up a unique picture of them (they claim to have identified c50% of all in-store sales to specific identified people). They were then able to serve them more relevant offers (and also avoid annoying them with irrelevant offers). For example, if they saw you regularly bought a breakfast cereal from Target, it would mail a special offer for milk (hoping to shift the habit of buying milk elsewhere to buying it alongside your cereal purchases). Target are able to track changes in buyer behaviour to assess changes in life, based on certain key patterns based on historic tracking of other people. Hence, when a person starts buying vitamins (esp. magnesium and zinc), it’s a strong indicator they are pregnant. Target were able to identify 25 different products that suggested a high likelihood of early pregnancy. Furthermore, they worked out what trimester they were in. In the end, they had to disguise the fact they knew so much about a person and surround the pregnancy product offering with more innocuous offerings as well.

 Cues

Cue – To create a habit, you need to first identify a very specific cue (The cue can be any sensory medium – sight, sound, touch, feeling or smell), then create a powerful reward that can be delivered by the routine inbetween. Research has shown that people are more likely to stick to habits if there is a very clear, specific cue (such as going straight into their bedroom and getting into running gear).

Identifying the cues – Alcoholics Anonymous have helped millions of people. Their 12-step process does not work at a psychological level but at a behavioural level. One of the things they do is list all the cues that trigger them to drink. Then they get them to list all the rewards and benefits they get from the drink. Only then can they develop revised routines to create new habits (such as attending sessions).

 Cue that triggers unconscious routine – Tony Dungy finally got his break to be the head coach of The Buccaneers Football team. His philosophy was simple: Install an unconscious pattern of play, so that the play is fast, effortless and unconscious (and so does not get knocked-off by the stresses of the occasion). He recognised it was very difficult to destroy a habit but easy to modify it. In this case he kept the cue and reward the same, but worked on changing the routine.  This led to endless drills to install the new behaviours.  He locked set routines against set cues. He became the only coach to reach the play-offs in ten consecutive years.

 Cue that triggers unconscious routine – The army drums into people unconscious habits that will be automatically executed without questioning when cued.

Cue that triggers unconscious routine – Michael Phelps, the Olympic swimmer dealt with his anxiety and nerves by locking himself into tight routines that allowed no room for emotion or thoughts to enter. He drilled himself to become a swimming automaton. In his training, he has even practiced for the unexpected (e.g. swimming in the dark).

Routines

Keystone habits – A keystone habit is one that triggers other behaviours/habits. For example, for dieters, food journaling created a structure that helped other habits to flourish. Six months into the study, people who kept daily food records had lost twice as much weight as everyone else.

Keystone habits – Paul O’Neil was appointed the CEO of The Aluminium Company of America (i.e. Alcoa). He set out a controversial vision of making it the safest company in America (a tall order for a company that deals in molten metals everyday). He knew that to change a lot of things he had to have a laser focus on just one thing (and that would ‘sweep up’ the other changes required – as to deliver zero injuries would mean a root and branch restructure of the whole organisation). He knew he had to unite a fractured management and workforce, so chose an area they could all align on. He instilled a culture (i.e. a habit) of continuous and never-ending improvements and he set clear metrics on safety for the organisation and the individual: He allowed any person to shut down a line; He ‘celebrated’ failure (as a way to learn);  He focused on the root cause of failure; He promoted people who fully supported the vision and symbolically fired a senior executive who failed to report a fairly minor incident.

Organisational routines – Sadly in organisations, we often need a disaster to force a change in routines (e.g. The Challenger disaster in 1986).

Identifying habits from failure and breakdown – An arrogant surgeon would not tolerate criticism from ‘lesser’ staff. One day, he operated on the wrong side of a patient’s brain resulting in his death. This (amongst others) led to a change in procedure that allowed anyone in the operating theatre to openly challenge.

When An evolutionary theory of economic change was published in 1982 it was largely ignored, but it contained the essence of why change is so difficult in organisations. Nelson & Winter had trudged through thousands of pages documenting change programmes in organisations and discovered an insight: “Much of a firm’s behaviour is best understood as a reflection of general habits and strategic orientations coming from the firm’s past.”  It may appear an organisation is making rational decisions, but often it is asleep to the patterns of decision making from a past (that has now metamorphosed). It holds onto long term beliefs, values, habits, prejudices, processes and behaviours that lock them out of seeing the new future. This then drives unconsciously the many micro decisions made across an organisation but all its staff. This leads to the organisation seeing only the angle of ‘truth’ the organisation wants to see (and people who suggest alternate truths get mocked, put down or rejected from the organisation). The departmental structures, the processes, the reward systems are all infected by this ‘organisational memory’. Thus, we see that habits help fast track decision-making but they can also become traps.

The book also blows out the myth that organisations are ‘happy families’ with shared common goals. In fact, most organisations are full of fiefdoms and power struggles, where departments focus on their own agendas (and in some cases, try to put other departments down as a way to secure access to the limited resources available). Furthermore, they create peer rivalry to prevent a coup and so reduce the threat to their own position. People ‘learn’ the behaviours of the organisation and when they get to become department heads, further continuing these dynastic behaviours. All this tension is kept at a manageable level (so company civil war does not break out) by other processes and habits. If you were to join an organisation and ask ‘How to get on in this organisation?’, you would not hear what is printed in the joining manual. You would hear of personalities, informal power structures, relational affiliations and conflicts. It would paint a different organisational structure and show the real path of how to get things done. Unless you can make the right connections (and truces) through an organisation (or the stakeholders outside) then you will fail.

Fiefdom’s – One of the reasons behind the Kings Cross Tube disaster in November 1987 was the silo’d attitude the different departments had. It was run by four ‘Barons’. They tolerated each other as long as they did not stray into each other’s territory. There were a lot of ‘unwritten rules’ (such as the fire department would only be contacted in extremis). No-one inside the station knew how the fire sprinkler system worked or was allowed to use the fire extinguishers. The Fire service were not allowed to use the water hydrants underground as no-one had permission to use them. Furthermore, no-one on site had a blueprint of all the tunnels that would have helped the firemen rescue some of the 31 people killed that day. Out of this disaster it created a radical restructuring of the organisation. Likewise, in hospitals and airlines, public disclosure of mistakes is helping to lock-out institutional failure.

Corporate habits – Starbucks prides itself in helping to develop life-skills in its people. In their first year of employment, its new recruits spend at least 50 hours in training. The key skill they develop is self-discipline (Research has shown that self-discipline is a greater predictor of grades than IQ). The key area of discipline was emotional self-control – they want to put a shot of joy (not anger) into every cup – including those stressed-out customers. They taught them how to ‘park’ their own issues & emotions and instead focus solely on their customers. Starbucks identified the key cues, developed alternate routines, and then encouraged the Managers to reward staff who had successfully dealt with a challenging situation. One technique they developed was the LATTE approach: Listen to your customer; Acknowledge their complaint; Take action, before finally Explaining why it happened.

Corporate habits – Deloitte Consulting are taught about how to deal with critical  moments that matter with their clients and colleagues: ‘Get curious -> Say what no-one else will -> Apply the 5/5/5 rule in how to respond’.

Rewards

Reward – If you want to develop a habit, the reward must significantly outweigh the costs for you to keep on doing it (committed runners talk about the real sense of personal achievement they get from running).

Identifying the reward – In Iraq, a commanding officer noticed the pattern of behaviours around violence. The longer the crowd stayed together the more likely it would eventually escalate to violence. He noticed that what held people there was the food and drink vendors that would appear. He therefore stopped these sellers coming, which led to a rapid dispersement of the rioters.

Cue Vs Reward – When Fabreze was first launched it flopped. They discovered that people in smelly homes do not notice the smell (thus the cue of poor odour did not trigger use of the product). They identified people instead used Fabreze as a reward (the cue being the tidied house rather than bad smells).

Identifying the rewards – A women suffering from severe nail biting was invited to record the number of times she was cued to bite her nails. This helped bring her attention to something which most times was unconscious. Then the therapist asked her to identify the rewards she got from biting them. She then gave her a ‘competing routine’ – i.e. every time she felt bored, she was to put her hands under her legs (thus creating a physical stimulation/reward similar to biting).

Discovering the right reward – The YMCA commissioned data analysts to help them improve the habit of training in their gyms. They found it was the human connection that was the real reward that made them come back.

Create craving through anticipation – To lock people in a habit you need to make the reward random in delivery. Research has shown brain activity lifts up before the reward – i.e. they anticipate the reward. When that reward is then NOT received it creates a CRAVING that amplifies the desire of the reward. That sense of disappointment becomes even more powerful than the pleasure of the reward – so they keep doing the activity to remove that pain of disappointment. This can lead to obsessive compulsive behaviour – where the rat keeps pressing the lever, the gambler keeps playing, or the golfer keeps swinging. Scientists have found that habits create similar craving reactions addicts have to their drug.

Anticipation/Craving – Claude Hopkins is one of the key admen who first started using these principles in his advertising. In the 1930’s he revolutionised the health habits with Pepsodent by recognising an unexploited cue (the film on your teeth) and linked it to a powerful reward (cool tingling sensation). The key was to create an ANTICIPATION of the reward as that builds the power of the reward. They created a craving for that cool tongue tingling sensation.

Reward: Creating anticipation – Ads create habits: The music, the imagery etc. (i.e. cues) gets linked to a routine (e.g. buying/consuming their product) with the promised reward bought to life in a dramatic, enticing way. You only need to cue the MacDonald’s arches to start salivating over the thought of their French Fries. You see an ad (say of Marlboro cigarettes) and it makes you think of the future rewards it offers you.

Almost wins – Reza Habib, a cognitive neuroscientist asked twenty-two people to lie inside an fMRI  machine and watch a slot machine spin round. Half of the participants were pathological gamblers while the other half were people who gambled socially but didn’t exhibit any problematic behaviours. The slot machine was programmed to deliver three outcomes: a win, a loss, and a ‘near miss’ (in which the slots almost matched up but failed to align). To pathological gamblers, near misses looked like wins. People without a gambling problem were better at recognising that a near miss means you still lose. This is why gambling organisations often set-up machines to give you an ‘almost win’ (as that encourages them to keep on playing).

Changing habits

The difficulty in breaking habits – The issue with habit is they become so ingrained, so powerful that even if we have a conscious awareness that they are not good for us, we cannot seem to stop doing them. Once the cue has been fired we are slaves to the habit. You can’t extinguish a habit, you can only change it.

Breaking bad habits – Angie Bachmann (pseudonym) was getting bored at home. So, she started visiting the local casino, initially gambling small amounts that she could afford to lose. After a while she got good, making a fair return ($6K one time, $2K another time). This led her to start gambling more frequently with bigger bets. However, after a while she started losing. She gambled harder, borrowing money to try to re-win her loses. The first time round she clocked up debts of $20K. She stopped, rebuilt her life but at one point the cue was so strong she was re-triggered back into her bad habits again. One day alone she lost $250K. She had inherited her parent’s estate, but lost it all to gambling. She calculated she lost in total $900K.

Belief – Belief is critical to change a habit (if you think you can’t change, you won’t). So, to change a habit you must believe you can change. Part of the 12-step Alcoholics Anonymous programme is a belief in a higher order to help. It helps recovering alcoholics deal with the inevitable glitches along the way.

Willpower – Changing habits is hard and takes time. Therefore, you need to persist and not give-up at the first failure.

Developing willpower – Willpower is learnable. Students were split into two teams to test their willpower.  They were both given two plates: a plate of cookies and a plate of radishes. One group was told to eat the cookies but resist the radishes. The other team told the opposite. They were then told to wait 15 minutes for next stage of the test. in the meantime, there was a simple puzzle they had to solve (in reality it was very difficult). Those who had eaten the cookies and ‘resisted’ the cookies tended to stay with the puzzle for 60% longer, suggesting our willpower gets weakened (e.g. when tired, drunk or emotional). This led the scientist to conclude that willpower is like a muscle. It can easily get exhausted but with exercise it can develop. They also found willpower developed in one area does spill over into others. Thus, sports or taking up a musical instrument teaches you self-discipline that is transferrable into other areas of life.

How to change habits – The book suggests four stages:

  • Raising the habit to consciousness – identify the routine – When in a habit, we are often unconscious of the behaviours. Hence to change a habit we need to raise our conscious awareness of exactly what we are doing. The first stage is to recognise the habit loop we are caught in (Cue -> Behaviour -> Reward). The easiest part of the pattern to change is the behaviour – as long as you keep the other two elements the same.
  • Isolate the cue – All routines are triggered by a cue. Cancel the cue and you stop the routine. Take for example, emails. If you switch off the inbox ‘ping’ cue, you take away the compulsive routine of constantly checking your system. The issue is the cue is often clouded by many other elements happening at the same time. There are five categories cues typically fall into: Location, Time, Emotional state, Other people, Immediate preceding action. Every time you feel the urge (or catch yourself in the act), write down what the cue might be in each of the five areas.
  • Experiment with some rewards – To overcome a habit we must understand which craving is driving the habit. The key is to identify the real need/benefit – e.g. is hitting the biscuits to do with boredom or low sugar level? You will need to try different behaviours to see what fits into your life and critically to see if it gives you a similar/better level of reward. If it does not, then it is unlikely to be a satisfactory replacement. Clearly you can ‘supplement’ a reward (e.g. you give yourself an additional treat). The author suggests writing down how you think/feel immediately after the activity. They suggest leaving it for fifteen minutes before doing any other activity that might trigger the reward. This helps let you know if the behaviour you are testing really did deliver the reward you needed.
  • Have a plan – Develop a clear strategy in advance of the cue. If/When…(Cue)…Then…(Behaviour) -> Reward. Then try it out. Sometimes it may work better than other days. But the more you try it, the more likely you will ‘scratch’ out the old behaviour and replace it with a more empowering habit.

CRITIQUE

This is an optimistic book. “Once you understand that habits can change, you have the freedom — and the responsibility — to remake them”.

It is full of interesting anecdotes and scientific evidence that keeps you turning the pages. That said, the book does meander a bit (making things into ‘habit’ when we would not normally describe them as such – e.g. socialised behaviour).

However, the key issue is the book’s overly simplistic model to habit change. The problem is that there isn’t one formula for changing habits. Unfortunately, there is no magic bullet (though intensive treatments and support can work). We assume that by ‘plugging-in’ the co-ordinates of the model that we can then control behaviour. So, the key question we need to ask ourselves: If you follow this will you get change? Behaviour change is usually much more complex than that. Take eating too much. In theory when we get the cue (e.g. an emotion) we then switch eating chocolate for a banana (as both release a sugar hit), but we know it does not work as simply as that. Foresight’s obesity system map suggests otherwise:

FORESIGHT OBESITY MAP

Also, there are other ways to change habits (E.g. laws – cf seat belt wearing in cars). Furthermore, all the summaries of behavioural economics demonstrate the power of often unconscious’s influences on our behaviour.

That said, The Power of Habit is an enjoyable book, and readers will find it useful – even if only to understand why they do some of those ‘cookie’ things they do.

 

 

 

 

 

 

 

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Book summary of Pre-Suasion by Robert Cialdini

Summarised by Paul Arnold – Marketing/Comms Strategist

paul_arnold@me.com/ www.paularnoldconsulting.com/ www.linkedin.com/in/prgarnold

The book in a nutshell

The highest achievers spend time crafting what they did and said before making their pitch.

Research has shown that unconscious priming can help ‘pre-frame’ a person to think in a certain way.

The basic principle of pre-suasion is all about the front-loading of attention. By guiding initial focus it’s possible to influence the audience.

The book explores a wide range of ways of ‘pre-framing’ people.

“The readiness is all” Hamlet Act 5 Scene 2

The book

Great persuaders spend time upfront creating a positive psychological frame before trying to influence. They recognise that the ‘pre-sell’ is of equal importance as the sell itself.

The ‘pre-sell’ can help prime people to think in a certain way that is supportive of your argument.

Cialdini identified six key principles from his first book: Reciprocation, Liking, Social proof, Authority, Scarcity and Consistency. Cialdini proposes that you can magnify the power of these by inferencing them in the set up. For example, if using authority is your key angle of influence, suggesting the idea of authority beforehand (in say a personal story) helps focus attention onto authority.

Priming – A Toronto based consultancy in pitching would say, “As you can tell, I’m not going to be able to charge you a million dollars for this…” helped ensure his $75,000 fee was acceptable.

Priming – In an experiment, the amount of money a person would be prepared to spend at a restaurant goes up if called Studio 97 as opposed Studio 17.

Focusing attention – the key tenet of pre-suasion is to drive attention in a certain direction that sets a person up to be persuaded. Since we live in a world of hyper-distractions, the more we can influence what the person is focusing on, the greater the chance of persuasion.

 “The press might not be successful most of the time in telling people what to think, but it is stunningly successful in telling them what to think about” – Bernard Cohen

 The book reveals a wide range of techniques to try to gain and keep focus:

Power of questions – Questions direct our attention. Thus, the initial prompt makes the brain travel in that direction. So be aware of the bias in any question.

Questions – Any question forces a focus. In an experiment Canadians were asked either “Are you happy with your social life?” or “Are you unhappy with your social life?”. What you ask is what you get. Unhappy focused questioners then seek out experiences in their life that fit with the question. Surprise surprise they find them and so declare themselves to be unhappy. The opposite of course happens to those asked if they are happy with their social life.

 Pre-questions – To encourage shoppers to take part in a questionnaire, the sales people pre-suaded with an opening question, “Excuse. do you regard yourself as a helpful person?” Volunteer rates rose from 29% to 77%. Likewise, to get people to try a new product/provide contact details they asked people if they considered themselves to be adventurous (33% -> 77%).

Co-creation – A sub-form of question. The more someone can be involved in the development of a proposal, the more likely they will ‘buy’ into it, and commit to making it happen.

Asking advice – Likewise, if you ask advice then people are more conducive to being persuaded (than by didactic lecturing). Gaining their input is a key step to influence as we create a ‘merging’ of ideas.

Saliency – What is salient (i.e. front of mind) becomes important (even if it is not important). Research has shown that it is not necessary the most pertinent issue that influences but that which captures the most attention (cf Kahneman’s WYSIATI – What you see is all there is). Thus, it’s not always a case of driving behaviour change through shifting beliefs or attitudes but through merely raising saliency.

In the Cyanide/Tylenol infected crisis in 1982, the infected batches were identified to be lots 2880 and 1910. Surprisingly, these numbers then got played on the lottery at unprecedented levels. Not because people have some perverted sense of humour, but because unconsciously these have entered into their focus.

What’s focal is what’s causal – Thinking is linking. Anything ‘in field’ can play a role in influence – it’s all taken into account.

 Leaders are attributed much greater causal responsibility for the success (or failure) of a company – because they are the focal point of an organisation.

 In an experiment, people were asked to observe a conversation between a man and women from one of the two people’s perspectives. They were then asked who was more influential in the conversation, the respondents always felt it was the person whose face they were looking at.

 Blinkered attention – We find it really difficult to focus on more than one thing at a time Therefore, when you engage the brain with one concept, you reduce its attention onto something else. Like the magician, who makes you focus on one hand (you are then distracted from seeing what he is doing with his other hand).

The American administration, to deflect attention away from ‘Weapons of mass destruction’, invited journalists to live alongside the combat units. This meant they focused on human interest stories (93% of all stories filed) and tended to forget the bigger issues (2% stories covered WMD).

Disruption – When we change things, we create a disruption from the normal, that shifts attention.

Editors in film put in cuts, music shifts, silence etc. to drive focus.

Milton Erikson, the famous psychotherapist would deliberately lower his voice when he wanted to emphasise something. The patient then has to lean forward, creating greater focus.

Using the different senses – Any of the senses can be used to stimulate attention. For example, auditory.  Use of different language can trigger different areas of focus (cf how business often uses the language of war – battle, conquest, target etc.).

If you are trying to encourage people to think rationally, then using words like “What do you think about…?” will help prime that part of the brain versus “How do you feel about…?’.

Likewise, the use of music, or any emotional arousing stimulus (like photos) will start to influence that part of the brain to be more dominant immediately preceding it. Conversely you do not want to use stirring music if your argument is best won logically.

Emotion – The more emotionally charged something is, the greater the attention it creates. We always see a contagion of stories in the press after one event as our attention is drawn towards it.

When we are in a good mood, all things look rosier (and vice versa). Hence why given an unexpected welcomed gift raises tipping levels:

Unexpectedness – Diners were offered a piece of chocolate at the end of a meal. Tips went up by 3%. However, when the waitress invited them to take two chocolates each, tips rose to 14%. However, if the waitress gave one, left the table, then came back and offered them another, such was the unexpectedness tips rose by 21.3%.

Specific emotions have extra high potency such as sex and fear:

Sex – Sex attracts attention and is a well-used ploy in advertising. However, it is only relevant for products about attractiveness as it’s about capturing and then focusing attention.

Fear – As a rule, presenting the negative consequences works better than emphasising the positive benefits. However, to maximise its impact, you should offer an easy step to a solution (so as not to leave the audience in a place of stress and hence denial).

When 9/11 tragically took place, people abandoned planes and drove. Sadly, an extra 1,600 Americans died in car accidents as a direct result – six times more than the numbers killed in the only US plane crash in the following year.

Getting past ‘System 2’ – When tired, the logical brain (what Kahneman called System 2) cannot resist the pressure of the emotional brain (System 1). Likewise, if rushed, overloaded, preoccupied, stressed or indifferent, then critical (logical) thinking goes out the window.

Research found that well rested Soldiers would question orders to fire on hospitals. But when sleep deprived they would meekly obey. Similarly, in Police interrogation, people would confess (often to the wrong things) when sleep deprived. Interviews that have led to false confessions often last more than sixteen hours (vs four).

People had to choose from three cameras. One camera was expert rated best on eight out of twelve criteria, suggesting a clear advantage over the others. When people were given just 2 seconds per criteria, only 17% choose the clear winner. When given 5 seconds, 38% get it right and when unlimited time, it went up to 67%.

Authority/Expertise – Likewise the authority/expertise of someone will cause us to pay more attention to them than to others. The messenger IS the message. Who says is what makes what they say more powerful.  Again our ‘laziness’ in decision-making means we often blindly believe in the wisdom of experts and authority (and so rarely challenge them). Thus, if you want to influence, you should first ‘pre-sell’ your audience on your own expertise/authority.

Trustworthiness – If we trust someone we are much more likely to listen to them, believe in what they say and follow their advice (and vice versa if you don’t trust them). Trust is a hard-won concept that takes time to acquire. However, the authors suggest one way of quickly generating trust: Reveal a weakness. Rather than trying to suggest everything is perfect in your proposal/offering, it’s better to ‘come clean’ on an aspect that is not perfect. This honesty opens up trust. If there is an issue that you know your audience will pick on, it’s worth highlighting it yourself. Ideally when expressing the weakness, you soften its impact with a suggested way of resolving it.

Revealing a weakness – At a restaurant do you trust the waiter who says everything is great on the menu, or the one who says, “Personally, I’d avoid the lamb…”

Trust – A highly successful salesmen would say he had accidentally left something in his car, and would it be okay for him to let himself in/out of their house? The insight was that no-one lets a person in/out of their own house unless there is some level of trust.

Countering a flaw – “I know I have the body of a weak and feeble women BUT I have the heart of a King, and the King of England too!’ – Queen Elizabeth I – Her speech to the troops at Tilbury in 1588 when preparing for the expected invasion from Spain.

Counter-arguments are often more powerful than arguments This is because it not only devalues the argument but also brings into question the trust in the other person

Liking – The more you like a person, the more attention you will give them (and vice versa if you do not like them).

Compliments engender liking. They nourish us emotionally.

“I can live for two months on a good compliment” – Mark Twain.

Chinese students who received a flyer complimenting them (“We are contacting you because you are fashionable and stylish”) were more likely to shop at the retailer.

People are more likely to ‘accept’ your reply if you say “That’s a great question!”

Background – The background may appear unimportant but unconsciously it gets noticed and thus can influence. Hence where an ad appears, which shops a product is sold in etc. all become background influences.

Places can also influence. Sometimes a change of venue opens up our thinking. Thus merely ‘dressing’ a room for a meeting can change the mindset of those who attend

An on-line store selling mattresses received very different sales results depending if they had clouds in the background versus pennies.

Product placements – Including products in familiar shows leads to positive associations. But research has shown that the most obvious ones gets ‘discounted’ as the viewer recognises the commercial relationship. However, subtle placement influences buyer perception more because they worked their magic unconsciously.

Evaluation – Merely inviting someone to evaluate a brand (without telling them what makes your offering better) will lead to increased persuasion as they will now have directed attention.

In an experiment, managers were asked to evaluate in more detail only one of four different strategic options. Without fail, they recommended the option they had evaluated.

Another way is to deliberately invite comparison with other competitors that helps dramatically bring to focus your point of difference:

In an experiment, a pair of sofas were compared (Dream and Titan). Both were similar except for the cushions (Dream’s were softer, Titan’s harder). In the tests, people preferred the sturdier cushions of Titan (58% vs 42%). A second group were then shown four sofas. Three of them had the same hard cushions as Titan. So now Dream (the only one with softer cushions) stood out as being different, leading to a shift in persuasion (77% in favour of Dream).

Self-Relevancy – We are automatically drawn to anything to do with us (cf mentioning your name is often enough). Data is allowing us to more closely identify what is specifically relevant to a person, to more personalise the message to them.

Curiosity – Curiosity is a powerful magnet to both capture and hold your attention (watch any ‘soap’ and you’ll see it at work at the end of every episode).

In research, the ad that was recalled was the one that was stopped 5 seconds before it was due to end. This memory recall lasted two weeks later.

One strategy developed by Somerset Maugham (who found it very difficult to write) was to finish his work half-way through a paragraph. Then he found it easier to pick up the next day. Likewise, Cialdini starts his lectures with an enigma (which he would not answer until the end).

Sharpness – The more concrete, vivid and real we can communicate something to someone the greater its ability to capture our attention as well as to influence (as they really ‘get it’). Conversely, if you make language too flowery, or too full of technical language, or use a difficult to read typeface/colour, then this diminishes its ‘cognitive ease of processing’.

An analysis of 89 randomly selected companies on the NYSE found that in initial trading of stocks, those companies with easier to pronounce names outperformed those with difficult to pronounce names.

Fund raisers were shown one of two pieces of communication about the value of contributing to the cause they would be soliciting for. One group were given it on a simple piece of paper, whilst the other group also had a photo of a person winning a race. The race winners group raised 60% more donations.

Metaphor – We are lazy thinkers and will often drop into metaphors/similes/analogies to help us make sense of things. Thus, suggesting something is like something else can heavily influence our mindset/focus. If you describe crime as a ‘spreading virus, infecting the city’, it will create more support (as well as drive a specific type of action).

“If you want to change the world, change the metaphor” – Joseph Campbell

Social proof – People are powerful influences – We are unconsciously seduced by other people’s behaviour. It’s the wisdom of the crowd. The greater the consensus (or risk), the safer/more likely we will follow that decision.

The best way to sell a dish in a restaurant is the describe it as ‘Most popular’. This makes dishes between 13-20% ordered more frequently. Likewise, Internet retailers use the power of social proof as well to drive sales (‘Other people who bought x also bought y’).

Validity –  If an energy provider says “You could save £xx” it is less effective than if you say “Others in your road ARE saving” as it is then more real credible.

Contagious behaviour – A Tennessee high school teacher reported a smell of gas. A hundred people went to the hospital that day with symptoms of gas inhalation. However, no gas leak was ever found. Likewise, a lecture on dermatology got all the students scratching.

Stereotypes – Due to our lazy thinking we drop into ‘heuristics’ – i.e. shortcuts. Stereotypes are one of these. Use of them guide our perception and thinking without any critical intervention.

Behaviour – Getting people to do certain things in advance can help precondition them for the next event.

In an experiment, it was found that people who had played violent video games were more prepared to deliver loud blasts of noise into another person’s ear. Likewise, those who had participated in prosocial games were then more prepared to help others afterwards (like cleaning up afterwards).

Reciprocation – If someone has done something for us unconditionally, we feel socially bound to ‘repay’ them – so will be more open to their influence (Research has shown that children as young as 2 have learned the rules)

Pre-giving – A hotel put a sign in the room that the hotel had made a gift to an environmental charity. This led to a 47% uplift in towels being recycled (versus when the message said the hotel would make a donation).

Reciprocation – Abu Jandal, Osama Bin Laden’s chief body guard refused to reveal information. After a while the interrogators noticed he did not eat the cookies. Further investigation revealed he was diabetic. So, they gave him sugar-free biscuits. This act of unexpected generosity partly paved the way for him to start sharing information.

Consistency – We all like to be consistent with our commitments and what we say. Therefore, in the pre-sell stage. If you can get your audience to commit to one small step (in the direction you want), then it dramatically increases your chance of success.

Priming honesty upfront – Insurance companies can reduce policyholder’s misreporting by getting people to sign an honesty pledge before they start to fill in the claims form.

Verbalising commitment – A blood donors service increased participation from 70% to 82.4% by getting people to verbalise their commitment by saying, “So we’ll mark you down as coming then?“ PAUSE TO CONFIRM.

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Unity

Cialdini believed there is now a seventh principle to stack alongside his original six.

We listen to and respond better to people who are ‘like us’ (and less well to people who are ‘not like us’). It’s about shared identities. Our desire to belong means we seek out and try to ‘bond with others like us (as keeps us ‘safe’ and protected.

There are a number of ways of driving greater ‘unity’:

Similarities – Rapport often comes from similarities. People are more prepared to do things for people they share some common feature with – be it nationality, name, birthday, star sign, sports team etc. It creates a closer ‘us-ness’. Even using the same words, they use can increase likeness We even prefer brands that share the same letters in the alphabet as our name.

Kinship – Any way that we can invoke ‘we-ness’ will help pull people together (and means the opportunity to influence is greater. Thus, words like ‘Brothers’, ‘Sisters’, ‘Motherland’, ‘Heritage’, and ‘Our sovereignty’ will all increase the collective ‘us-ness’.  Likewise, to imply that another presenter is ‘not like us’ alienates them and reduces their power of influence.

Sameness – In the late 1930’s, the Japanese were accepting displaced Jews. In July 1940, 200 Jews queued outside the Japanese Consulate in Lithuania. The Consul General, Chiune Sugihara, signed their transit orders in open defiance of his seniors back in Japan. In the end, he helped save thousands of Jews – something that ultimately cost him his career – because he saw their ‘sameness’ rather than their difference.

Identification with each other – In 1942, after Japan had allied itself to Germany, there was pressure from the Reichstag to get rid of the Jews. When seniors of the Japanese High command consulted with Jewish leaders they asked, “Why do the Germans hate you so much?” Rabbi Kalisch replied, “Because we are Asians – like you”. That one statement cemented their ‘us-ness’ and Japan protected its Jewish community.

Shared behaviours – In the Soviet controlled Warsaw during the 60’s there was a lot of ceremonies, marches, pageants and general flag waving. The people were encouraged to attend and take part. Even though conditions were difficult, there was a shared camaraderie and ‘togetherness’ – a sense of pride in their nation. Thus songs, rituals, dances etc. all help create a sense of cohesion. Our general desire to belong means we will unconsciously also adopt many of the beliefs and values of that group that we want to belong to. The more you want to belong to that group, the greater the unconscious power to conform (you often find the more extreme zealots are outside on the edge of a group rather than necessarily at the centre – such is their desire to be accepted in).

Behaviour starts to pull people together. Those people who do the same thing are more likely to see themselves as one (versus other who do other things). Thus, the more you can get people to do the same thing then it’s more likely they will feel a greater sense of connection. Even very simple acts (like tapping together, singing a song together or walking in the same way) can create temporary togetherness.

Co-operation – In exercises where people have to co-operate (versus exercises where pitted against each other), those working together saw their partner to be more like them.

Arthur and Elaine Aron came up with a questionnaire that helped ensure greater success in building relationships. It involved asking 36 questions, where both have to answer before moving on. The questions start quite shallow (such as “What constitutes a perfect day for you?”) before going deeper and deeper (to questions such as “Of all the people in your family, whose death would be the most disturbing?”). This creates a shared exposure and opening up to the other person at a level not normally experienced with many other people. (http://www.independent.co.uk/news/people/news/these-36-questions-can-make-you-fall-in-love-with-anyone-a6772366.html)

The ethics of persuasion

Cialdini admits to having been criticised in the past for providing unscrupulous people with tools to manipulate others.

Certainly, these principles likewise can be misused for the wrong issues. Cialdini counters (weakly) that he raises their awareness so we can protect ourselves against their use. He also rightly stresses It is unrealistic to expect applying pre-suasion is a guaranteed way to influence. The principles discussed here will work primarily at the margins on influence.

In a WikiLeaks, hyper transparent world, we need to do the right thing as we will be found out. Trust is hard won and easily lost (cf VW).

People who work in unethical companies also suffer: Lower performance levels, higher anxiety, greater sick days, higher staff turnover etc., The cost of these quickly mount up (especially if you include cost of litigation, hiring fees, increased wages to attract people etc.).

Critique

 

This is essentially another book on Behavioural Economics, focused on the principle of ‘priming’.

I found it a bit of a dull book to read (probably as read too many other similar books).

The book is a bit ‘flabby’ with lots of fill and repetition. It’s not a well-structured book (it took me ages to ‘edit’ it down into a more coherent piece).

As always, we need to take what is said with a degree of skepticism. Just because there is one piece of evidence (an experiment or whatever) that supports the hypothesis, that does not mean it is conclusively proven. There could well be many counter examples/experiments that either refute, or support an alternate hypotheses.

 

 

 

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Grit – The power of passion and perseverance By Angela Duckworth (Summarised by Paul Arnold, Strategic Planner,Facilitator and Trainer)

gritThe book in a nutshell

Grit is a key factor for success in life. Grit is a mindset of not giving up. It gives us the staying power to push on through the trials and tribulations and remain dedicated to the cause (that eventually leads to mastery and success).

Grit can be learned (but is often imprinted in us from our parents and culture). We need a belief that failures and setbacks are just learning lessons to catapult ourselves forward.

The driving engine of grit comes from having a compelling purpose that is deeply important for us (and in many ways defines us). It is further enhanced if what we are doing is also of value to other people. This helps galvanise and focus our efforts on the end goal without being distracted by the inevitable upsets and failures along the way.

A key to skill mastery is ‘deliberate practice’ as then we make incremental steps of improvement every time.

The book

At Westpoint (The US Military Academy) 14,000 students apply. Only 1200 people meet the rigorous academic, physical and psychological standards to be admitted. Yet 20% of them will drop out before graduation. So after all the testing, why do 240 fail each year? Research has shown they lacked grit (i.e. a ‘never give up’ mentality). Grit is a key factor behind many successful people (in business, arts and sport). Grit is the mental toughness to keep on pushing through the tedium, the tough times and the failures. Most successful people failed before they succeeded. It was their tenacity and determination to not give up that led to their eventual success.

The reality is all people are unlucky some of the time (and lucky some of the time). Successful people accept the swings and roundabouts of life and do not give up. Indeed they tend to use the downers as a motivator to push on through.

The author developed a grit scale (here is a shortened version).

To calculate your score, add your score and divide by 10. The higher the score the higher your grit. 

The authors research showed a strong correlation between academic level (e.g. MBA, PhD etc) and grit.

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Talent versus Effort 

Talent is over-rated. Everyone has some predisposition to be good at something. But it takes hard work to turn raw talent into achievement. Many people with talent have failed to capitalise on their innate abilities.

Harvard Psychologists William James asserts, “Compared to where we ought to be, we are only half awake…We are making use of only a small part of our possible mental and physical resources…the human individual lives usually far within his limits

Conversely, many people with limited ability have developed talent by putting in the hard yards. Grit defines ‘staying power’. It’s about perseverance to a cause. So whilst it is not necessarily a guarantee of success, we know (to quote Woody Allen) “80% of success is just showing up”.

Darwin was a ‘plodder’ rather than being an intellect. But it was his love of his subject that kept him engaged longer than others.

The problem is we live in a culture that rewards ‘natural talent’ (especially intelligence) versus the hard worker. Our TV shows and sport stadiums celebrate innate, raw talent.  Organizations likewise have focused on hiring the brightest (often from the best universities) and culling aggressively the less talented (‘up’ or ‘out’).

The trouble with focusing just on talent is that it rewards the 1% and dis-incentivises the 99%. Research suggests constant effort dedicated to one area is more influential on success than our genes.

Dedicated Focused effort

Excellence is achieved rarely in leaps, but small incremental steps, spread over a long period of time, and gained from endless practice. The reality is they acquired greatness through dedicated, long-term focus.

Nietzsche once wrote, “Great things are accomplished by those people whose thinking is active in one direction”. There is not enough time to do everything we want to do. If we want to excel, we need to focus (and thus let go/de-prioritise other things).

Letting go: Award winning chef, Marc Vetri was initially interested in music. At music college, he had to get a job to fund his education. After a while he fell in love with cooking, and focused his energies there. 

Dedicated focus: Warren MacKenzie is a celebrated potter. When younger he experimented with many different art forms until eventually he fell in love with ceramics. His passion for pottery meant he was happier to give-up the other art forms and dedicate his time to perfecting the art of pottery. He knew success would not be found in dabbling but having a searing focus on one thing. He said, “The first 10,000 pots were difficult, and then it got a lot easier”.

Duckworth came up with a simple model:

1) Talent x Effort = Skill

2) Skill x Effort = Achievement

Hard work really matters. Talent by itself will lead to nowhere. We need to work hard to turn talent into skill.  When we have skill we then need to work even harder to rise above the many others who also have skill to attain mastery (that then leads to achievement).

Turn it around. If we lack talent in an area we need to make even more effort to reach the same level of skill as someone who has lots of natural talent.

Hard work: Will Smith, the Oscar winning actor once said, “I’ve never really viewed myself as particularly talented. Where I excel is a ridiculous, sickening work ethic…The only thing that I see that is distinctly different about me is: I’m not afraid to die on the treadmill. I will not be outworked. Period.You might have more talent than me. You might be smarter than me. You might be sexier than me…But if we get on that treadmill together there’s two things: You’re getting off first or I’m going to die. It’s really that simple.”

Deliberate Practice

Kaizen is the Japanese for CANI – Constant and Never Ending Improvement. It’s a continuous drive to progress (and not become complacent).

People who practice more, generally do better in things. But it all depends on the quality of practice. Some people have 20 years of experience whilst others have one year of experience repeated 20 times. Thus practice is much deeper than just the hours spent – it’s more about the quality of those hours. The key seems to be deliberate practice.

Deliberate practice means having a real focus, with deep awareness, and concentration during our training sessions (so that there is a very active ‘feedback loop’ in operation allowing us to improve every time). Each session is purposeful (leading up to our higher goals) often with specific objectives for each session. First we have a stretch goal (some high level ambition – e.g. winning Gold). Then we break it down into manageable training objectives/milestones (e.g. be at x speed by y). Then each session builds a particular area of expertise (e.g. working on leg lift, eye focus etc) zeroing-in on just one aspect of our overall performance.  We need to be really focused on feedback so we know if we are achieving our objectives. Every session is an opportunity to learn and grow. Every session not learnt from is a wasted session.

Deliberate practice takes a lot of effort. It’s easy not to push ourselves, but that’s not how a muscle is built. It takes straining (not just training) to build the skills to perform at the highest levels. As one coach said, “They need to learn to love the burn”.

Quantity of quality: Rowdy Gaines, the three-times Olympic gold medal swimmer swam ‘around the world’ in practice for a 49 second race! The reality is the people who also swam in that final had also swam a similar distance. It was won in the quality of those miles, not the quantity.

Mihaly Csikszentmihalyi (pronounced cheeks-sent-me-high) focuses on the state of high performance where the individual is ‘in flow’. It’s a state of almost unconscious action, where the body (rather then the conscious brain) runs the show. Actions are effortless, more fluid and natural unlike the clumsy interventions of the under-evolved conscious part of our ‘intellectual’ brain (unconscious competence versus conscious competence).

“You feel as though you do not exist…my hand seems devoid of myself. I have nothing to do with what is happening….and the music just flows out of me” – Conductor

“It was just one of those programs that clicked…it’s almost as if you don’t have to think, everything goes automatically” – Ice skater.

These periods of ‘flow’ are intoxicating and addictive as we touch (briefly) a higher level of ‘self’.

Thus there are two stages: A very conscious state of practice that then leads to an unconscious state of flow. It would appear that people who undertake deliberate practice experience more frequent periods of flow. It’s through strained effort in practice they can perform in a very relaxed, almost effortless, fluid way in the heat of battle.

Passionate purpose drives perseverance

Life is short. Follow your passion”, said Will Shortz, Editor for New York Times. Jeff Bezos told Princeton Graduates, “If you’re not passionate about what it is you’re working on, you won’t be able to stick to it.” Successful people love what they do. They rarely do it for the money but for the intrinsic reward it brings them (and because they are excellent at it, they make money from it).

Yet a recent Gallup poll revealed that more than two thirds of people were not engaged in their work. The same was found across 141 different nations to varying levels. Indeed, when questioned, few people could tell them what they were truly passionate about.

Grit has two components: passion and perseverance. Without the passion, we will not have the perseverance to keep on pushing through all the monotony and downturns. Passion needs to be enduring and not fleeting. It’s something we need to care about deeply. It’s important to us. Indeed its purpose starts to define us. Achieving this goal is not just a ‘nice to have’- it’s a real ‘imperative’

Looking back at the grit questionnaire, add up all the odd numbers (and divide by 5) to get a ‘passion’ score and all the even numbers (and divide by 5) to get a perseverance score.

Evidence: A Stanford Psychologist, Catharine Cox analysed 301 exceptional achievers from their biographies. She coded their reported traits (from intelligence though to extroversion). From there she drew correlations to try to work out the difference that made the difference. Cox found a leading trait: Persistence of motive (i.e. persistence driven by passion).

Passion and perseverance need direction to make them purposeful. That is why we need a goal to aim for. Without a target the passion will be wasted. Having a goal not only helps drive action but it further strengthens the passion and resolve.

Defined by your passion: Hall of fame pitcher, Tom Seaver, had 311 wins to his name with 3,640 strikeouts. During his 20 year baseball career he aimed to “pitch the best I possibly could day after day, year after year…Pitching is what makes me happy. I’ve devoted my life to it”. Often by focusing on the small things the big things come.

The trouble with goals is they can feel too lofty – too big, too distant to either believe or achieve. We therefore need to set interim, stepping stone objectives along the way – ones that stretch yet are still achievable (but ultimately lead to our goals). We need to analyse what are the obstacles, and then work out our strategies to get past them. That said the goal should be immoveable but the strategies need to flex (as with any long journey, detours are inevitable) – so we should write the goal in pen and the strategies in pencil.

The ability to adapt to win: Roz Chast, the celebrated cartoonist contributed 571 cartoons over his career to the New Yorker. From an early age he wanted to be one of the best cartoonists in the world. But it did not happen over night.  He had enough rejection letters from the New Yorker to paper his bathroom. So he changed his strategy. He analysed all the cartoons in the new Yorker going back to 1925 to work out what was the missing ingredient. He found all the cartoons had a personal style. Also they made people ‘re-think’. With these new insights, he upped his game and after another 2,000 rejections, eventually got published. His advice to budding cartoonists is to draw in batches of ten because, “In cartooning, as in life, nine out of ten things never work out.”

Out of interest grows purpose

There seems to be a classic path to purpose: First comes Interest. Many people have an unconscious interest in an area (what the author calls an ‘enduring devotion’). Because they enjoy the area they spend more time doing it than other things, leading to stage 2: Practice. Practice means they slowly get better and better at it. After a while they move into the third phase: Purpose. Their interest has moved beyond the average and they now see it to be something of great importance to them. Something that in many ways defines who they are and what they see to be important. This helps turn up the flames of both interest and practice as it becomes more purposeful. Finally there needs Hope.  Hope is the unwavering belief that they will get better and they will hit their ambition (inspite of all the setbacks along the way).

Not only was it about themselves but they all talked about how what they were doing benefitted others as well (i.e. not as selfish as we may think of a person dedicated to a sport). It appears a person first starts with a purely selfish interest but at some point has an epiphany about its connection to a bigger external benefit for society/others. Then purpose and passion gets leveraged. Purpose appears to have greater gravitational pull if linked to a higher calling outside of just themselves. If they see what they are doing helps others, it galvanises effort and resilience to the cause.

Dealing with failure

Failure is a key part of any person’s success (progress rarely runs a straight course). We tend to learn more from when we fail than when we succeed. It makes us re-evaluate our strategies and commitments. But some people give up, allowing their internal negative talk to kill their ambition.

Sadly our culture trains people from an early age to have a negative experience of failure. When a baby falls over when learning to walk it giggles. When at Kindergarten, mistakes start to get ‘pointed out’. We instil them with embarrassment, shame, sadness and fear – and that carries on for the rest of their lives. No wonder people do not want to risk failing.

Hope 

‘Fall seven, rise eight’ – Japenese proverb

Hope dies last

Hope is a critical factor in perseverance. It’s about a belief that things will get better.

Hope makes us not give up, to not accept the status quo, to push on and dare to try new ways to achieve our outcome.

Seligman ran a whole series of experiments in the 1960’s to show that when we give up hope we move into a state called learned helplessness (in one famous experiment, dogs just laid on the ground and learned to accept the mild current that flowed through their kennel floor). In many ways people accept the same.  Seligman has also suggested that we can develop learned optimism.

Newer research has shown that optimists have as many bad events in their life as pessimists but choose to react differently. In a test, pessimists were asked what reasons they give when they fail to complete a task. Pessimists tend to jump to permanent things that cannot be solved (e.g. “I always screw things up”). Optimists instead blame transitory things that can be addressed (e.g. “I mismanaged my time”). They see setbacks as points of learning. Further research has shown how pessimists are more depressed, anxious and less gritty.  They also tend to be less successful in career, life, relationships and health.

Optimism drives repeated performance: Coaches invited Olympic swimmers to swim their best. Afterwards they told them they had performed less well than was actually he case. When offered the chance to swim it again, Optimists performed as well as the first time, whilst the pessimists performed significantly less well.

Fixed versus Growth mindset

Carol Dweck, a psychologist defined two different mindsets that can lead to a grittier predisposition.

Some people have a ‘fixed’ mindset. This means they believe that their talent/ability is primarily defined by their innate, genetic make up. Since we cannot affect our DNA it means they see there is a limit to their growth. Thus they do not see the point of expending too much energy. Dweck found that people with a ‘fixed’ mindset gave up on hard tests (and tended to cheat more). They are also unlikely to take on difficult challenges for fear of being ‘found out’

Other people have a ‘growth’ mindset. These people believed their ability could be enhanced through hard work. The critical issue is they saw failure as a learning opportunity (they don’t over-react to them). They tend to work harder, do better at school, enjoy better physical and mental health, and have stronger and more positive relationships. And of course they are grittier.

One of the keys to a growth mindset is knowing what to do next. We need to have the ability to diagnose the cause of the failure and then work out our strategy to address the issue.  Too many people do nothing because they do not know what to do. We need to take responsibility for our actions and seize control of our destinies.

Grit can be grown

The key question is how much is grit nature or nurture? The short answer is it’s a bit of both (this has been investigated through 2000 pairs of identical twins).

The reality is we tend to learn/model such mindsets at a very early age and they can stay with us a lifetime. It’s not about a protected and mollycoddled life away from stress but more how we react and deal with the stresses and downturns early on. If early-on we  failed in some way, but were guided with healthy strategies to cope and push on, then we are more likely to adopt those strategies later-on in life. It’s often about the perceived locus of control. If we see ourselves to be a ‘victim’ and believe we have little or no control of the situation we move into a place of helpless and hopeless. However, if we see the situation as transitory and that we do have some degree of control, then it gives us the strength to keep on pushing.

Conversely if when young we did not cope with such situations, it is likely to become a default setting for future events in our lives. Many kids raised in deprived backgrounds are getting far too many early lessons in helplessness which sadly sets many of them up for failure in life.

Likewise, the children of the wealthy who have had highly protected, ‘gifted’ lives have never experienced failure so have not yet learned how to cope with setbacks and failure. These ‘fragile perfects’ know how to succeed in life but have not yet learned how to fail.

We often see two ends of a continuum in parenting from the nurturing, loving support at one end and the more authoritarian, demanding and tough style of parenting at the other. So which is best to breed a mindset of gritty children? Is grit forged in the crucible of unrelenting high standards or nurtured in the warm embrace of loving support?

The reality is it’s a mix of loving supportive high standards (i.e. tough love). Parents need to set standards that become the accepted norm. The key then is to not tolerate a drop in those standards.  It’s also a lot to do with perceived expectation. If a parent/teacher/coach truly believes we can perform at a certain level (that is often above our own belief), then we will rise to it. It’s about developing in our children the self belief, self-worth and confidence that they can succeed. Finally, more often than not it’s less what parents say and more what they do (as we learn from modelling those significant others around us).

Expectations derive performance: Psychologists David Yeager and Geoff Cohen ran an experiment where they asked Seventh grade teachers to provide feedback on a student essay. After wards, the researchers assigned them into random piles. Onto the first pile they added a Post-it that said, “I’m giving you these comments so that you’ll have feedback on your paper”. On the second pile they wrote, “I’m giving you these comments because I have very high expectations and I know that you can reach them.” Students were then given the opportunity to resubmit. 80% of those with the high expectations remark resubmitted, whilst only 40% of the first pile did. The high expectations group also made twice as many amendments to their essay.

The playing fields of grit

Partaking in some kind of extra curricular activities has also been shown to help improve grittiness as they are about mastering a skill (be it ballet, drama, football, violin etc).  There are countless studies that show that children involved in extra-curricular activities fare better on every metric (grades, self-esteem, behaviour, future employment, financial health  etc).

It would seem that the trials and tribulations of developing an extra curricular skill (supported by good teachers and peers) help train our children in the mindset of persevering and not giving up in the face of failure. The sad reality is many schools are now so cash strapped  and overburdened with admin and there is little extra-curricula activities that the teachers can support.

Trained-in effort lasts: Psychologist Robert Eisenberger trained rats to press a lever for food. In one group he made them work hard for their food (twenty presses) versus the other group where they got a pellet after just two pushes. When they were then set other activities, the hard working rats demonstrated more vigour and endurance than the ‘easy’ rats.

Evidence: The Personal Qualities Project in Princeton University developed a predictor test for future achievement. They followed several thousand students for five years starting in high school. From their studies they isolated over 100 different traits that could influence performance (inc personal background, socioeconomic status, IQ etc). One factor stood out as the principal predictor of success: Follow-through.

Using grit as a key criteria for job selection: At Microsoft, they used to give potential software programmers a task that would be tedious and take ages to complete. This was a test of their follow-through to the end line and not give up. 

A culture of grit

The culture we live in (and most identify with) powerfully shapes our beliefs, values and hence behaviour.

A culture is an invisible psychological boundary that connects us. It is the shared norms, values and behaviours of a group i.e. ‘How we do things around here’. When we adopt a culture, we take on its values and behaviours. At its highest level we identify with that culture – it defines us. Eventually we become the embodiment of that culture. Thus if we want to be like a certain group of people, then we should join that culture. If we want to become a great swimmer, we need to join a great team. Likewise, if we want to increase our grit, we must join a culture that has grittiness at its core. Then their ‘norms’ of performance and standards become ours (for example when everyone else is getting up at  four in the morning to go swimming it seems normal to us as well).

If we want to create a strong culture we need to define (and hold to) some key values. These then need to be constantly and continually communicated.

Creating a culture: An interview with the head coach of the Seahawks (the Seattle based American Football team) revealed how attention to detail was critical to embed the culture. For example, use of specific language is key along with regular use of rituals.

Critique

Whilst it is an easy book to read (having been written in a conversational style) I found the book to be quite light with limited robust data.  It was also very repetitive (frankly I did get a bit bored towards the end).

A lot of the evidence is based on correlations (and we know that correlations does not mean causation). For example, we do not know for sure that it was the grit component that led to the success (as success is multi factorial). As often is the case the researchers/author find the answer they want in the data presented.

The book seems to be more focused on hard work than the mental toughness of grit.  I had expected more in the area of mental toughness along with a range of techniques to build grit. Indeed she only offers one strategy (in our grasp) to develop our grit and that is to have a purpose.  I still sense we need more than this to build mental fortitude.

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A beautiful constraint – summary

A-BEAUTIFUL-CONSTRAINT

A beautiful constraint.

How to transform your limitations into advantages.

By Adam Morgan & Mark Barden.

 Summarised by paul_arnold@me.com – Strategic facilitator, planner and trainer.

The book in a nutshell

Every cloud has a silver lining. When life gives you lemons, make lemonade. Constraints are assumed to be a bad thing, but in reality they can often be the grist that creates the pearl. Rather than being a restrictor, they lead to bolder, more innovative solutions.

Every person and every organisation faces constraints. With a more positive attitude and use of techniques you can leverage these constraints for competitive advantage.

The authors recommend a six step process:

Step 1: Victim, Neutraliser & Transformer

Step 2: Break path dependence

Step 3: Ask propelling questions

Step 4: Can-if

Step 5: Creating abundance

Step 6: Activating emotions

The book

Introduction

A constraint is a limitation imposed by outside circumstances or by ourselves that materially affects our ability to do something. The authors prefer the definition. ‘A limitation or defining parameter, often the stimulus to find a better way of doing something.’

We should view constraints not as a restrictor but rather a stimulus for increased creativity and positive change. Many managerial systems focus on either managing out or removing constraint from a system. This book however advocates embracing the constraint.

There are three types of constraint:

-Foundation – A limit in one of the key success factors of a category – e.g. Zappo’s online shoe retailer where customers can’t try on the shoes in store. To overcome this constraint they offered free return shipping.

– Resource – Raw materials, time, money and people/talent etc – e.g. Southwest airline who had only three planes but four routes to serve. To overcome this they revolutionised the industry by developing a turnaround time of just 10 minutes when it was one hour.

– Method – Where have to do something in a certain way e.g. Aravind eye hospital in India used the principles from fast food to overcome the log jam in eye surgery.

The two solid fuel engines that power the space shuttle are 4 feet 8.5 inches wide as that is the width of the railway tracks needed to carry them from Utah to Florida. 4 feet 8.5 inches is the size of the roads first built by the Romans. Thus one of the most advanced pieces of technology is constrained by a convention set up 2000 years ago.

Mick Jagger’s unique dance came about from years of performing on tiny stages in small clubs.

Google’s home page is simple because Larry Page was not adept at coding.

Simcha Blass from Netafim (Israel) noticed that one tree had grown taller than others planted at the same time. A burst pipe meant water constantly dripped near the tree. Tests helped him discover that drip irrigation not only leads to increased growth of crops by 20% but also used 50% less water.

Super-Mario characterisation came about due to the poor pixelation on eight-bit technology.

Twitter’s constrained 140 character limit has driven its popularity.

The book suggests a stepwise approach to turn constraint into abundance by a three part, six step process:

Part 1 – Mindset

Step 1: Victim, Neutraliser & Transformer

Step 2: Break path dependence

Part 2 – Method

Step 3: Ask propelling questions

Step 4: Can-if

Step 5: Creating abundance

Part 3 – Motivation

Step 6: Activating emotions

Step 1: Victim, Neutraliser & Transformer

How you perceive a constraint will affect your ability to deal with it.

There are three kinds of mindsets that influence how you approach a constraint:

-Victim – Sees the constraint as a limiting problem so will lower their ambition.

– Neutraliser – Sees the constraint as a roadblock on the way to their ambition. They will find a way around it without compromising their goal.

– Transformer – Sees the constraint as an opportunity to improve their goal.

Different constraints at different times trigger different reactions. Often people go through all three.

In 1980’s Dan Wieden was briefed by Phil Knight at Nike that he do not want any advertising that looked, felt or smelt like advertising. Wieden stuck a photo of Finnish Olympic runner Lasse Viren above his desk and thought what would he say to him that would not make him laugh? Since then the culture inside the agency is to ‘walk in stupid each day’ (so not driven by past convention).

Marissa Mayer (ex Google) knew the importance of self imposed constraints: “We need constraints in order to fuel passion and insight”. Her team was restricted in size (625Gb) and teams of just three people with just one day to create a prototype.

To help get into the right mainframe, the authors pose a few questions to challenge yourself with. What if you increase the level of the constraint (e.g. from 12 months to 6 months; from 20% increase to 100% increase….). Then answer the following questions:

1) Do you believe it is possible? (Mindset)

2) Do you know how to do it? (Method)

3) How much do you really want it? (Motivation)

As regards mindset, it’s useful to think of past times where you (or others) have beaten the odds. Be aware of your surrounding culture (be it your organisation or personal circles) as these groups can unconsciously influence you positively or negatively. Are you surrounded by ‘Can-do’ people or ‘Can-not’ people?

When Yves Behar first presented the idea of providing a laptop per child for $100, he was constantly confronted by nay-sayers.

Sir David Ogilvy once said, “Thank goodness of the freedom of a tight brief”. It’s the very constraint that creates creativity not hampers it. 

Psychologists found that when a fence was erected in a playground, the children used more of the space than before.

Jerry Seinfeld imposed self constraint (of no sex or swearing) to raise his own comic creativity.

Step 2: Break path dependence

We get locked into doing things certain ways without even thinking why. This blocks creativity. Constraint forces us to challenge these.

Sydow, Schreyogg and Koch suggested organisations go through three stages of path dependence:

Stage 1: Broad range of approaches used – Left up to managerial discretion

Stage 2: Adoption of ‘best practice’ – One recommended approach. Some degree of flexibility

Stage 3: Locked in – No room for flexibility. Often by this stage it becomes unconscious and never challenged.

Thus we tend to approach problems in the same way. We look at the same data, we ask similar questions, judge things on the same old criteria, involve similar partners, look at past solutions, and end up making the same decisions. No wonder we rarely unlock those intransigent problems! Even with completely new situations we tend to use old patterns (Einstein once said, “We can’t solve problems by using the same kind of thinking we used when we created them” – Ed).

Historic reporting structures and language can lock us in (e.g. US government still report employment in terms of ‘non-farm payroll’. Also a department called ‘optics’ will assume all answers must lie in optics). Daniel Kahnemen talks about how the naming of something makes the invisible become visible.

There are three types of ‘lock in’:

– Cognitive – Personal limiting mainframes

– Cultural – Collective limiting mind-frames and

– Procedural

People outside an industry are free of the locked-in mindset. This allows them to see new revolutionary solutions that the current incumbents are blind to.

Moore’s law is as much a mindset as it is about the physics. Because people believe the story, they make it happen.

Reverse innovation – rather than taking a product developed in an advanced market, creative innovation can come from working in more naive, developing markets who are able to think differently and so open up new possibilities cf the cheap car was developed in India.

Dr Louise Waters is the CEO of Leadership Public Schools in San Francisco. She noticed that kids from deprived backgrounds were 4-5 years behind in education standards by the time they reached high school. Rather than be constrained by this, she set an ambitious target that all her pupils would reach the standards by high school age (yet with no extra funding). This led to different approaches such as tailored learning for each child, and getting instant feedback on learning via  a revolutionary piece of technology.

When Nike developed their Flyknit shoes they needed to forget everything they knew about how to make uppers.

Breaking path dependence first requires an awareness of dependence and challenging the accepted wisdom (e.g. the benchmarks and KPI’s used, the current relationships used etc etc). It’s often achieved over many small steps as opposed to one big jump. The authors suggest identifying the most important six words used in an organisation and to then interrogate them. Furthermore they recommend mapping out all the process steps and challenging each one. It’s also worthwhile looking at things through a different lens (e.g. using external people – including your consumers).

Unilever challenged its own assumptions, by asking what would happen to taste if they increased the amount of green tomatoes allowed in their recipes from 5 to 10% – a criteria set many years before and had never been challenged.

Surf dug deeper into their ‘Savvy shopper’ segment by mapping their entire day through the lens of the snakes and ladders game. They identified that cleaning is lonely and joyless. This allowed them to build new emotions into the brand.

Visa changed who they wanted to be benchmarked against from their standard competitors such as Mastercard to the world’s most powerful brands such as Apple and Nike.

The US Navy had to break many paths of dependence to develop aircraft carriers.

One of the other sources to break conventions is to start asking different questions (ask the same questions, get the same answers). For example, asking how to market a brand when in heavy constraint (such as dark markets where no advertising is allowed as small brands are effectively in the dark shadows of high spending brands).

Virgin use the flight safety video as another ‘advertising space’ to demonstrate the brands distinctive personality.

Step 3: Ask propelling questions

Part of the way to break through is to start asking more powerful questions.

Just focusing on being ‘a bit better’ than your competition is a recipe for extinction. You need to think bigger – and focus on better meeting the real needs of your consumers. “Don’t just be ‘better’, be really amazing”, says Larry Page of Google. He sees his role to ask bigger questions. He calls these ‘10x’ questions. He asks questions that on the surface seem ridiculous or impossible, such as “How can we reduce car accidents?” Asking impossibly difficult questions demands novel solutions rather than staying inside the normal parameters of problem solution.

These ‘How to’ or ‘How can’ questions are called Propelling Questions as they force you to think differently. A propelling question has both a bold ambition and a significant constraint.

The construct of a propelling questions is asking a How to….(Bold ambition) with …(constraint) e.g. How to grow better barley with less water?

IKEA asked a propelling question: “How to make a durable, well-designed table for $5?” To answer this, they had to ignore the conventions of table making and  explore lateral solutions. They found the answer by sawing doors in half.

Audi asked a propelling question: “How to win LeMans if our car could go no faster than the others?” The answer was to make it more fuel efficient (as less pit stops). Hence the development of the first Diesel racing car that won LeMans three years in a row.

Made.com asked a propelling question: “How to exhibit at the world’s most prestigious furniture exhibitions in Milan without paying for an exhibition hall?” They were able to borrow the apartments of four of their supporters and used them as exhibition spaces. They received over 1,000 guests.

SAB asked, “How to increase barley yield and quality while reducing water consumption by 10%?” They spoke to Barley farmers and found that barley growth has three distinct stages. Reduced water in the middle stage promotes growth. The new approach reduced water consumption by 48%, yet increased yield (with a reduced cost per hectare of $40).

George Bernard Shaw once wrote, “The reasonable man adapts himself to the world, while the unreasonable man persists in adapting the world to himself….therefore all progress belongs to the unreasonable man”. Consumers are becoming more demanding – compromise is no longer tolerated (which becomes an empowering constraint). Those who unlock an area of compromise in a category open themselves up to great fortunes.

The authors identify a range of different areas of constraint (but there may be others unique to your organisation):

– Constraint of Foundation – A fundamental foundation for success – e.g. How to see shoes without a retail outlet on the high streets?

– Constraint of Resource – Budget, time, people, skills, knowledge – e.g. How to launch a new rum brand without a budget?

– Constraint of Method – Where constrained by a certain mode of delivery – e.g. How to win at LeMans without a faster car?

There are of course many external constraints on an organizations as well (e.g. Political, Economic, Social, Technological, Environmental, Legal, etc)

There are four sources of ‘unreasonableness’:

– The unreasonable regulator – e.g. US Government set corporate average fuel economy  goals of 54.5miles per gallon by 2025.

– The unreasonable consumer – Why can’t I have high fashion items at high street prices? I want cleaners that clean as well as other products but are ecologically friendly. I want the best mobile phones and the best networks without being tied into a contract etc.

– The unreasonable customer – e.g. Walmart demand higher standards of pricing points from its suppliers.

– The unreasonable challenger – Challengers from outside the category. e.g. Air BnB. Or challengers from a young upstart in a category – e.g. Tesla vs Mercedes.

 

Step 4: Can-if

Optimism erodes away over time. That’s why we need propelling questions and leaders that keeping inspiring action towards the goal. Academics have shown that positivity correlates with both resilience and openness. You need to keep focus on what has to happen to make it work rather than be de-railed by why it can’t work.  The authors coin a phrase, ‘Can…If’  (versus, ‘We can’t because…’).

Fail your way forward – Keep investing in solving the problem.  If at first you don’t succeed, find a new way (rather than getting trapped in just trying to do the same strategy again). So don’t fall in love with your strategy else it will blind you to its failings.

IDEO’s Tim Brown has observed that constraints (like most issues) are rarely one-dimensional. Thus to really unpick a problem requires multiple layers of ‘Can…If.

Taiwan needed to build a robust economic platform to withstand the pressures from mainland China, but they had a key constraint, natural resources. So the propelling question became, ‘How do we boost our economy without natural resources? The first level answer from their ‘Can…If’ questions was, “We can boost our economy without natural resources IF we increased the level of education”. But this led to the next constraint of a lack of teachers.   Their next ‘Can..If’ helped them to utilise graduates as teachers. This then fed the next identified constraint of lack of schools. This resulted in identifying new sources of funds (effectively taking funds from other government departments who would all benefit from raised educational standards).  Since improving the education, Taiwan’s economy has grown by c9% every year for 30 years (higher than Japan). They are a country of just 23m yet have the fourth largest cash reserves in the world.

Useful sources of ‘Can…If’ are:

-We can if we think of it as… – Metaphorical approaches that breaks the constrained pattern of thinking – e.g. Health services who see patients as customers.

In the time it takes to load a game, players can now practice their skills – so no longer see the upload time as a negative experience of the game.

-We can..if we use other people to… – Think laterally about who to ask help from.

DuoLingo has 1.2m people translating for free as they see it as an opportunity to improve their language skills.

-We can..if we remove x… – Often simplifying a process helps unlock value and time.

A chain of hair colouring salons in New Zealand stopped drying customers hair, allowing the stylists to move quicker onto new customers, saving time and money. 

CitizenM looked at what people most wanted in a great hotel experience (bed, shower, technology and design) and took away the things that mattered less (no double sinks, no robes, no slippers, no tea, no minibar, no paper receipts etc).Thus they were able to offer top hotel experience at 75% of the price.

-We can…if we access knowledge of… – Finding new sources of knowledge.

PHD, the global media agency, tapped into the knowledge resource of its 3,000 global employee base. A brief would be open to all employees (it included a gaming element where there was a publicised leader board of those who had contributed the most).

-We can…if we introduce a… – New product or service.

Surf increased its fragrance levels leading to a more emotionally rewarding experience. Surf grew by 36% globally from 2009 to 2012.

-We can…if we substitute x for y… – e.g. substituting an airbag ‘scarf’ for a cycle helmet (as many people found helmets flattened their hair).

-We can…if we fund it by… – Finding new sources of funding e.g. crowd sourcing, customer sourcing (cf BrewDog) etc.

-We can…if we mix together… – Putting new things together.

Recipes generated by a computer led to ‘Thai Swiss Asparagus Quiche’.

-We can…if we resource it by… – Finding new resources that currently do not have. E.g. Rent a runway wanted to rent out top designer fashions, but they did not have the finance to buy the items. So they convinced top designers to supply them the dresses for free. Uber, AirBnB and BlaBlaCar riding service in France are all examples of tapping into new sources.

In Kenya, chicken farmers were losing a lot of chicks to arial predators such as eagles and hawks. The other issue was disease.  But farmers did not want to invest in inoculating all their chicks since most of them got eaten.  By painting the chicks blue the eagles did not recognise them, thus increasing the yield, making it more cost effective for farmers to inoculate.  These two measures increased survival rates from 20% to c85%. However, this created a knock-on problem: food. The Can…if solution was to exploit the underground legions of termites. But the next issue was how to ‘excavate’ them? Another part of Kenya had already solved this issue using bundles of waste crop soaked in water.

 

Step 5: Creating abundance

The award winning TV show, ‘Whose line is it anyway’ works off the core idea of constrained resources. The comedians see this as a leverage point for creativity rather than a restriction.   It’s easy solving problems with more resources – but more fun and rewarding to do it with less. To start you need a positive mindset.  Secondly we need to be open to new sources. People born into poverty tend to be more resourceful than those born into a world of abundance. Thirdly, we rarely mine all the resource opportunities we have around us as. For example we only think of resources as those being within our immediate control; we tend to wait for resources to be given to us rather than going out hunting for new ones; the resources we do have we do not extract all the resources possible from them. Finally we do not think what resources we have that we could barter with.

There are four common resources to explore:

– Invested stakeholders  – e.g. made.com were able to exhibit at Milan by displaying their furniture in four of their customers spaces

– External partners – e.g SAB working closely with farmers

– Resource owners – e.g. The NGO Colalife used CocaCola’s distribution might to deliver packs of their dehydration salts to children suffering from diarrhoea across Africa

– Competition – e.g. Ford & Toyota collaborating on technologies for hybrid trucks.

When Virgin America launched in 2007 their goal was to ‘put glamour back into air travel’. They wanted their airlines to feel like nightclubs in the sky.   But they lacked money for the launch. They saw the planes as an asset they could leverage. So they flew Victoria Secret’s models to their annual fashion show (gaining lots of PR for their in flight pyjama party). 

This who share our agenda/values/mission/purpose are more likely to contribute resources. Also those who recognise they lack something we have will also be up for bartering.  The aim should be to work on selling people our mission/purpose/values etc and also helping them to see that what we have is what they re missing.

The World Association of Girl Guides and Girl Scouts benefits from the Dove Self Esteem program as they have a shared vision of preparing girls to become fully functioning successful adults. 

Nike gave away the intellectual property rights for its ‘Making’ app (which catalogs 75,000 different materials by environmental impact and sustainability) because Nike values a sustainable future for all.

 

Step 6: Activating emotions

Admiral William McRaven, Commander of the US Special Operations Command wrote a book called Spec Ops. In it he discussed six principles that make special operations successful – Simplicity, Security, Repetition, Surprise, Speed and Purpose. Purpose helps drive meaning and internal motivation that overcomes the barriers along the way.  It turns something from a want to a MUST.

Gallup has shown how giving people meaning at work drives performance (after all if you don’t care about the problem then less likely to solve it). Angela Duckworth identified ‘grit’ as a key component of successful people – that tenacity to keep on pushing forward towards a goal despite obstacles, hurdles and failure. She found out it was a bigger predictor of success than IQ.

‘Desirable Difficulties’ describes the notion that there can be some advantages of a disadvantage. For example, a person from  a ‘constrained’ background may be more resilient,  more resourceful and may have more drive to succeed than those born into affluence.

No way out – When you offer people an ‘early exit’ strategy it allows people to opt out, and not keep pushing. If there is no way out of something, then people are forced to keep on pushing.

Utilising different emotions – Negative emotions can be a powerful driver leading to persistence, commitment and focus. Dan Wieden (W&K advertising) likes a milder form of fear – anxiety. “If you can remain insecure, yet optimistic, you’ve got a pretty good chance of changing the world”. Many brands are born from dissatisfaction with the category.  BrewDog came about because its founder hated the ‘mainstream, industrial, monolithic, insipid, bland, tasteless, apathetic beers that dominate the market’, making them into the ‘punks’ of beer.

The UK pub chain, JD Wetherspoon was named after a teacher who told Tim Martin he would never amount to anything. 

Juxtaposing an ‘away from’ negative emotion with a ‘towards’ positive emotion offers an even greater chance of success.  Research has shown that the most successful problem solvers toggle between looking at a broad range of stimuli (which relies on positive emotional energy) and then switching o a focused persistence (ideally driven by fear and anger as these help you really focus your energies). Jack Dorsey, the founder of Twitter and Square talked about this value of tension in setting up his businesses.

Prof. Gabriele Oettingen, the head of Motivation at New York University has distinguished three approaches to reach a desired outcome:

– Indulging – Create a vivid picture of what it would look like if (so inspired by its positive emotions).

– Dwelling – Sitting in a place of negativity where think of all the things that could go wrong or what would happen if did not achieve this goal. This creates the anxiety and fear that motivates.

– Toggling – The most effective space. It’s a bit like an electric motor – the shifting between -ve and +ve creates the drive.

Critically though, it does need a plan that gets actioned!

Stanford’s Design for Extreme Affordability is one of the most difficult courses to get into (only 6% applications accepted). They look for EQ (emotional intelligence) as much as IQ as they realise the inter-relationships between the students is critical to problem solving. They deal with high stress situations (e.g. premature babies) so they need to remain calm under pressure.

The fertile zero

The resource curse – Countries rich in natural resources tend to do worse economically than those without resources (Norway accepted) as excess resources leads to complacency. This theme runs true with organisations and individuals.

Tobacco companies bankrolled Formula one for decades. In 2005 the gravy train ended with the banning of tobacco sponsorship. Ron Dennis, the leader of McLaren instructed that every single process be interrogated to identify areas of savings and improvement. This led to many step change processes, one of which included reducing pit stops from 4sec to 2.5sec.

Sometimes going for ‘zero’ can unlock new creative solutions. Some routes to explore are:

– Drama & surprise – BrewDog had no money and hence no advertising (in a category where advertising drives sales). This forced them to be creative and make the brand come alive in social media. Drama helps the brand stand out, create attention and engages emotions. It also promotes conversation and creates memorability. It’s recommended to be ‘unexpected’ to create surprise.

Warby Parker, the eye wear specialists created an unexpected annual report where they talked about the inner workings (including unexpected facts and mistakes).

Prof Sir Andre Geim found it difficult to convince his science peers about electromagnetism – so he levitated a frog to bring alive the power of electormagnatism.

– Being interesting on the inside – If you do not have the budget to talk about yourself, you need to get others to talk about you. To do this you need a great story. If it’s not interesting, it’s not shared.  Thus the focus is on creating interest.

Sailor Jerry Rum was created by an advertising creative called Steve Grasse from his agency Quaker Mercantile. Ironically he built it with no advertising spend. The brand was built through support of grass roots movement amongst punk bands  and a clothing range (Grasse talks about how it is key to be true to the tribe you want to engage). He claims that because he did not know how rum brands were meant to ‘behave’ he did it his own way, defying the conventions of the category.

Grasse’s next project was recreating old pre-industrial folk recipes such as Rhubarb tea (The story behind this is Benjamin Franklin brought rhubarb seeds to America and gave it to the King’s Botanist, John Bertram who developed a tea from it).

Cordarounds sell corduroy trousers with their ridges running horizontally rather than vertically. They are distinctive and it creates a talking point.

Aesop beauty brand has grown to 43 stores worldwide.  They want to put intelligence into beauty.  Thus their shop staff were asked to refrain from mindless small talk/chatter.

– Making a secondary medium your primary idea platform – This is about owning a distinctive media space.

Alcohol advertising was banned in the 80’s in France. Heineken developed different bottle shapes and sizes to match different drinking occasions, helping it grow by 600%.

– Alliance to scale – Building new types of partnership. History has shown great advances are made when there is a strong coalition of people working towards a common goal

CitizenM did not have money for mass refurbishment. Vita, the Swiss furniture company also did not have the money co-develop retail outlets. A coalition meant Citizen M got their lobbies decorated for free, and Vitra got a showroom in every city.

– Other people’s resources – Using customers and consumers as your R&D resource.

– Commercial innovation –

Vitamin water developed an alliance with the rapper 50 Cent.

English Rugby needed to raise £2.5m in 2011. They placed a £250,000 bet with the bookies that they would win.

Constraint driven cultures

The culture of an organisation influences the accepted behaviour. Often the history (the ways the company does things) and the values of the founder/senior leaders can deeply affect current behaviour. Embracing constraints is part and parcel of some organisation’s culture.  The key success factors appear to be:

-Big ambition and strong intent

-Start from the top and empower key people

-Make it central to the business

-Be consistent

-Be willing to challenge and interrogate every partnership and process

-Be a storytelling culture

Ingvar Kamprad, the founder of IKEA came from Smaland, a place that used the rocks from the fields to build the walls and the road. Kamprad was always looking at ways of reducing/using waste (hence why he used the feathers from plucked chickens to make affordable duvets). Such attitudes run all the way through IKEA.

Nike had a problem with workers not wearing face masks to protect from the toxic fumes from the glue. Rather than monitor them 24 hours a day, they instead developed a less harmful glue.

Unilever’s goal is to double its size whilst halving its environmental impact by 2020. They do not have all the answers, but feel committed to work through the solutions.

Change success takes a number of different factors – if any one of them is not done then it will not lead to the high levels of success:

Summary

Constraints make us search for solutions in new areas. They make us ask different questions and rethink things. Constraints help us expand, not constrict. In the global competitive world, we need to create  better solutions, and constraint thinking is a powerful tool to inspire new ways of thinking and doing.

 

Critique

This is a beautifully designed book (just study their models – well thought through but then beautifully executed through design). It’s full of anecdotes and good practical information (although as is often the case, I felt it was running out of steam towards the end).

One of the issues is that the culture must be tolerant of constraint thinking. Raising some issues/questions inside an organisation can be difficult. Mavericks in my experience are rarely tolerated, preferring people who do not challenge the status quo.

Also we need to beware of ‘constraint fatigue’.  If managers over play the ‘Let’s build in an artificial constraint’ then managers (who already have enough constraints anyway) will just tire of such punitive demands.

Defining the brand story

Posted in Advertising, Brands, Change, Creativity, Decision making, Leadership, Management, Marketing, Uncategorized | Leave a comment

How Brands Grow – What marketers don’t know by Byron Sharp (Summarised by Paul Arnold – Facilitator, Trainer and Strategic Planner)

how brands grow

THE BOOK IN A NUTSHELL

The book challenges conventional ‘wisdom’, replacing it with empirical facts. Its key conclusions are:

  1. Growth primarily comes from gaining new users (penetration) rather than driving increased loyalty. Most of a brand’s users will be light users.
  2. Brands need to build physical availability (distribution) and mental availability (saliency).
  3. Even though brands differentiate themselves, in reality consumers still react (and buy) within a repertoire (as if there were no differences). Indeed, distinctivity is more important than differentiation – as it helps drive saliency.
  4. Advertising works by refreshing (and occasionally building) past memory structures.

The book rejects the concepts of brand loyalty, differentiation, segmentation, Lovemarks, and targeted (i.e low reach) media.

THE BOOK

The key principles and laws that help reshape marketing

Double Jeopardy Law – Brands with higher market share have more buyers than brands with lower market share. They also have buyers who are slightly more loyal.

Retention Double Jeopardy Law – All brands lose customers in rough proportion to their brand size (i.e. brands with higher market share lose more buyers than brands with lower market share). That said even though the percentage of its total brand universe is smaller, the sheer size of the brand mean the actual number of lost customers for a larger brand is bigger.

Pareto Law (60/20) – c60% of a brand’s sales come from just 20% of their buyer base.

Buyer Moderation Law – Buying tends to regress back toward the mean – i.e. high volume purchasers in one cycle tend to buy less in the next cycle, and low volume purchasers tend to buy more in the next cycle. Likewise some non-buyers become buyers (and some buyers become non-buyers).

Natural Monopoly Law – Brands with higher market share have a greater proportion of light users than brands with lower market share.

Brand user bases seldom vary – Competitor brands sell to the same customer profiles inspite the efforts to segment and differentiate (i.e. there is less brand differentiation and segmentation of user bases than we think).

Attitudes and brand beliefs reflect behavioural loyalty – Consumers like and know more about the brands they buy more regularly (and know very little about brands they do not buy). Because larger brands have more regular users, they always score higher in brand attitude surveys than other brands.

Usage drives attitude (or ‘I love my mum and you love yours’) – The attitudes and perceptions for a brand amongst its users are very similar, irrespective what brand it is – because we all like the brands we choose to use.

Law of Prototypicality – Image attributes of a brand that are more closely tied to the category always score higher than attributes less associated with the category.

Duplication of Purchase Law – A brand shares most of its customers with the largest brand and the least number of its customers with the smaller brands – e.g. If 30% of a brand’s buyers also bought brand A in a period, then 30% of every rival brand’s customers also bought brand A.

NBD-Dirichlet Model – A mathematical model that explains many of the above principles of how often buyers purchase from a category and which brands they buy.

Evidence based marketing

In reviewing nine leading marketing text books, they found it full of unproven ‘advice’. All the texts reinforce and support each other in suggesting a set ‘way’ of doing marketing. Many things we have been led to believe are important have now been shown to be less important. Examples including changing packaging, running advertising that jettisons its past, over-investing in loyalty programmes, promoting with deep discounts to recruit new users and spending on low reach media.

Through empirical analysis, we can now separate facts from myth:

From (old myths)

To (the facts)

Positioning

Saliency

Differentiation

Distinction

Message comprehension

Getting noticed; Emotional response

Unique selling proposition

Relevant associations

Persuasion

Refreshing & building memory structures

Teaching

Reaching

Rational involved viewers

Emotionally distracted viewers

Attitudes drive behaviour

Behaviour drives attitude

Brand switchers

Loyal switchers

Involvement

Heuristics (i.e. short cuts to meaning)

Growth through driving loyalty

Growth through driving penetration (of light users)

Price promotions win customers

Price promotion rewards existing users

Target marketing/segmentation

Sophisticated mass marketing

We compete on positioning

We compete with all brands in the category

Message comprehension

Getting noticed, emotional response

Unique selling proposition

Relevant associations

Teaching

Reaching

Campaign bursts

Continual presence

 

How brands grow

There are now over one million brands that obey some basic principles:

  1. The larger the brand share, the greater the number of customers – Whilst in theory you could have two brands of the same size – one with a few buyers who buy frequently and an other with a lot of buyers who buy infrequently, the reality reveals that all brands obey the same rules – they all have lots of buyers who buy the brand infrequently.
  2. Loyalty varies in line with brand share – Loyalty does not vary as much as brand shares but it does reflect brand share in that big brands have slightly higher loyalty levels than small size brands).

Washing powder brands (UK)

Market share (2005)

Annual penetration (2005)

Average purchase frequency (2005)

Persil

22%

41%

3.9x

Ariel

14%

26%

3.9x

Bold

10%

19%

3.8x

Daz

9%

17%

3.7x

Surf

8%

17%

3.4x

Even when you have highly differentiated brands in a category (such as Head and Shoulders and Vosene) still follow the Double Jeopardy Law. H&S had a brand share of 11% (Vs 2% for Vosene) in 2005, an annual penetration of 13% (vs 3% for Vosene) and average purchase frequency of 2.3x (vs 1.7x for Vosene). In other words, the larger the brand, the more buyers (and the average frequency of purchase is also higher).

Net, the way to boost the loyalty level is not through a loyalty campaign but by increasing the user base.

3. Brands primarily grow by increasing its number of users – Ehrenberg studied the success of 157 brands and found the factor most closely linked to their growth of decline was increase (or decrease) in its user base. The IPA advertising effectiveness awards found in 82% of the 880 papers entered reported growth from penetration (and just 2% from loyalty).

Penetration strategy

Loyalty strategy

Gold winners

21 papers

2 papers

Silver winners

20 papers

6 papers

Bronze winners

18 papers

3 papers

No medal awarded

41 papers

89 papers

Source: Binet & Field 2007

Niche brands – The core principle of niche brands is they have fewer, but more loyal customers. The reality is there are very few true niche brands. Most still have a wide number of buyers who buy them infrequently.

Cross-selling – Multiple products under a brand is also a common strategy for growth. But cross selling is just another form of loyalty and thus follows the Law of Double Jeopardy – i.e. the greater the size of the brand, the higher the level of cross selling.

How to grow your customer base

The marketing facts of life are that brands will always lose buyers each year. Indeed they follow the Law of Jeopardy – i.e. the larger the brand size, the more customers they lose (even growing brands). The larger the brand the higher its loyalty. The smaller the brands the slightly larger its defection rate.

Defection rates Car brands in UK & France (1986-1989)

Penetration %

Defection %

Ford

27

31

Nissan

6

45

VW/Audi

5

46

Peugeot

5

57

Renault

4

52

Citroen

2

48

Toyota

2

50

Honda

1

53

Source: Colombo, Ehrenberg & Sabavala, 2000

A study by Riebe (2003) showed that in the pharmaceutical category, brands that were in decline shared the same level of defection as successful brands. The issue for their decline was primarily to do with their inability to gain new users. She also replicated the study in France for shampoos and chocolate bars which supported her findings – that loyalty declines with market share.

Financial Institutions in Australia

Market share %

Defection %

CBA

32.0

3.4

Westpac

13.0

4.3

Bank SA

1.4

5.0

Adelaide Bank

0.8

7.0

Ave Defection rate

4.8

Source: Roy Morgan Research

Net: It is essential for a brand to develop an acquisition strategy if it wants to grow.

Which customers matter the most?

All marketing books propose targeted marketing as opposed to mass, blanket marketing. Today the trend is for targeting ‘influencers’ through ‘new’ media. Yet forming deep relationships with a substantial number of users in unlikely. All brands have many lighter users, and these lighter users contribute significantly to sales volume. Even for a brand like Coca Cola, light users dominate. And this is also the same for smaller brands. Marketers often forget how infrequent their average buyer buys (For example 30% of Coca Cola buyers do not even buy once a year. For Pepsi, it’s 50%). At the other end, just 4% of Coca Cola’s total buyers deliver almost 25% of total sales. These people are easy to market to (because they are often in your aisle, and are more likely to notice your advertising). You can argue that it’s not the best use of marketing funds to aim at these people as they are already committed buyers. It’s the infrequent buyers who are the majority of your user base. Pareto’s Law for Marketing is not 20/80 but more like 20/60 (ie 20% of buyers accounts for 60% of sales).

Furthermore, we misunderstand what light users are. Approximately 14% sales in a year come from people who had not bought the brand the year before (these are light users yet would be classified as ‘non users’). Likewise, the heavier buyers tend to buy less than they did the previous year – i.e. lighter buyers get heavier and heavier buyers get lighter (= a regression to the norm for all buyers):

% brand sales year 1

% brand sales year 2

Non buyers
(i.e. 0 purchase year 1)

0

14

Light buyers
(i.e. 1 purchase in year 1)

14

16

Medium buyers
(i.e. 2-4 purchases in year 1)

43

36

Heavy buyers
(i.e. 5+ purchases in year 1)

43

34

Source: Anscheutz 2002

Brand numbers may appear fairly static over time but in reality there is a lot of individual fluctuations within those numbers. People do ‘jump’ category – it’s not the same people who remain in one category all the time. Thus a brand does need to reach a wide range of users as they all change. Marketing aimed at the vast number of light users and/or non-buyers has been shown to be more effective – thus broad reach, mass marketing is the way to build a brand.

Our buyers are different

All brands assume their brand is clearly differentiated from the other brands in the category, appealing to a discrete and distinctive target group. Sadly this is not the case. The profile of the typical buyer is the same for all the key brands.

A historic piece of research compared the personality profile of buyers of Ford and Chevrolet and found they were essentially identical. More recent studies (mainly by Ehrenberg & Kennedy) have profiled hundreds of brands from dozens of categories (from cigarettes to mortgages) over time. The studies examined hundreds of variables (demographics, psychographics, values etc).

The key discovery was that competing brands sell to the same sort of people.

Perception, attitudes and intentions do not differ much across the different brand’s customer base – for example the ‘I love my mum – and you love your mum’ syndrome: Consequently buyers of Brand A think as well of their brand as buyers of Brand B think of their brand. People who regularly hire a Hertz find them to be clean and have attractive rents – as do people who hire Avis etc.

An associated (but different) piece of research (by the Ehrenberg-Bass Institute) shows how everyone has the same reasons for choosing their last holiday destination – irrespective of which place they went to.

New variants – Marketers often launch new variants in the hope that it will reach different people. But the reality is they rarely differ. The reality is the customer bases of brands in a category are very similar (the key difference is just the sheer numbers) – Versace sells to the same people who buy Gucci!

Who do you really compete with?

Marketing has moved from mass marketing to target marketing through segmentation. The facts suggest that people buy across a category and are rarely solus brand users.

Buyers of Brand….

%age of buyers who also bought regular Coke

Diet Coke

65

Fanta

70

Lilt

67

Pepsi

72

Source: TNS

Buyers of brand…

Carte D’Or

Walls

Ben & Jerry’s

Haagen Dazs

Nestle

Mars

Carte D’Or

15

8

8

9

4

Walls

34

7

8

9

3

Ben & Jerry’s

38

14

26

13

8

Haagen Dazs

37

17

26

8

8

Nestle

39

17

12

7

9

Mars

41

12

18

17

22

AVERAGE

38

15

14

13

13

7

Source: TNS

Likewise, research by Ehrenberg has shown that customer gains for BMW in France come more from large non-premium brands like Peugeot and Citroen than from other premium brands like Mercedes and Audi.

Thus, it is unlikely than any brand owns a discrete segment of buyers. Most brands share (and hence fish) from the same pool of buyers (and in line with the size of the brand). The Law of Duplication of Purchase predicts that a brand will lose more customers to the largest brand within a category (and conversely, will also gain the most number of users from them). This again suggests a move back to mass market media (especially TV) to reach as many of the category purchasers as possible. The individual messages helps draw attention to a brands (minute) differences that may ‘nudge’ people on a temporary basis to choose that brand (but we know they will also buy other brands later on).

Research suggests that one of the biggest drivers of segmented buying of brands is distribution. If people can buy all the brands in the same place, then sales will spread across all those available. Collage for examples sells all its toothpastes in one place. If a brand has a unique route to market, then its more likely to have a differentiated user base.

Passionate consumer commitment

We know that familiarity breeds liking – i.e. prior experience of a brand makes a person more favourable to it (so a Coca Cola user will like the taste of Coke versus Pepsi and vice versa). We also know that brand cues can influence their perception (e.g. McDonald’s French fries taste better when you know they are from McDonald’s than when left unbranded).

Whilst brand loyalty is not perfect, a brand that has a greater emotional closeness is more likely to get greater than fair share purchase from an individual (they will still buy other brands as well). Brand loyalty helps us save time and effort in reviewing all options.

There are very few people who are solus buyers (and no brand is made up of solus buyers) – the average number of solus buyers for a brands is about 13% (i.e. 87% are multi brand buyers). We also know from the Double Jeopardy Law that larger brands will have more sold buyers and smaller brands will have less.

Category

Annual Category purchase rate

Brand

Brand share

100% loyal buyers

Analgesics

5.1

Tesco

22%

37%

Neurofen

8%

27%

Deodorants

5.6

Lynx

17%

21%

Dove

7%

17%

Breakfast cereals

21.5

Kellogg’s

29%

7%

Weetabix

9%

2%

Yoghurts

29.7

Muller

24%

7%

Danone

3%

2%

Source: TNS

Larger brands tend to have a higher proportion of light users due to the statistical nature of larger numbers (also known as the Natural Monopoly Law). For example, if you were to just buy one can of Cola a year, it is more than likely it would be Coca Cola.

Likewise, heavy category buyers are more likely to buy more brands. Thus, smaller brands are more likely to also be bought by the heavy category buyers (who will by definition be the most common buyers of the larger brands as well). Hence buyers of the smaller brands tend to be bought by people who are heavier category buyers. To illustrate, Cross & Blackwell sauce buyers on average buy tomato sauce 8 times a year (i.e. twice as much as the average purchase rate) – even though they only buy C&B 1.2 times a year.

Tomato Ketchup brands

Market share%

Penetration %

Frequency of buying this brand each year

Frequency of buying any tomato sauce each year

Heinz

5.3

50

2.9

4

Daddies

4

5

2

6

Cross & Blackwell

1

2

1.2

8

Source: TNS

Buyers tend to restrict their repertoire to a smaller range within a category. For example, a household with a choice of 80 channels, tend to switch between only 12 channels (effectively ignoring 85% of channels). Interestingly, when the choice increases to 200 channels, people still tend to stick to just 12 channels.

Lovemarks – Many marketing texts talk about creating value, delivering customer satisfaction, building relationships and creating engagement. This makes us ‘see’ their behaviour through such lenses i.e. the reason why a person buys a brand is due to this emotional connection the brand has created with the individual. Yet these theories (especially as proposed by Kevin Robert’s Lovemarks) are largely untested assumptions. We do not ‘identify’ with most brands in the same way we do with our sports team. Consumers are busy people and do not have the time to reassess decision-making every time they walk into a store. Furthermore, the risk of a bad decision over a tin of soup is so low to mean there is no seriously bad choice. In reality, most brand choices are routine, passionless* and often unconscious – thus brand loyalty is not an active choice but a passive one.

(*Research by neuroscientists reveal there is only very slight emotional responses to brands).

When we see a consistent image score (e.g. ‘Hertz rents attractive cars’) we assume then people constantly think that. But when you dig into the individual data lines, you find individuals shift their attitudes on brands – some go up and some go down – so under the seeming static-ness of the number actually lies a lot of fluidity. This does not mean that consumers are permanently shifting their attitudes towards or away from the brand, but it appears consumers are often in flux (and hence their response can depend on what’s going on at that moment for them). Thus one time they may fancy Hertz, and another time Avis. At this point, minutiae of influences can nudge a person one way or the other (and not all of these influences are brand driven).

Australian

Financial Services Brands

%Initial agreement to statement ‘Would value me as a whole person not just a transaction’ % of the first score that repeated their agreement with the statement. Respondents who agreed in both surveys
ANZ 11 53 .53 x 11 = 6%
St. George 11 35 .35 x 11 = 4%
Colonial 6 33 .33 x 6 = 2%

Source: Ehrenberg-Bass Institute

Net what we think about a brand is not absolute nor is it static. In reality, most people rarely think deeply about most of the brands they use.

Brand fanatics – there are obviously some people who are 100% loyal to a brand. Some are loyal because they are such infrequent buyers (e.g. once a year) whilst others are regular, solus buyers. This may be due to rational decisions (e.g. availability) and in some cases it’s because they are fanatical about the brand. Curiously any brand can have a few fanatical loyalists (including 7-Eleven!). Apple and Harley Davidson are the poster boys of emotion driven brand loyalty.

The facts are that buyers of these two brands also buy other brands in their category (Buyers of Harley Davidson buy other brands twice as often as they buy a Harley). Apple’s repeat buyer level in 2002/3 (i.e. loyalty) was only slightly higher than average (and significantly less than Dell). Nike is no more loyal than other brands bearing in mind its market size. This is not to say these brands do not have fanatical followers, but they are a small percentage of their total buyer base and hence revenue (and may not be any larger than many other brands). Sadly these brands do not get a good advocacy kick via social media (as evidence suggests people only talk about new things they are doing or buying, not established patterns).

Net – we like what we buy (and may well find post rationalised excuses for what we did not buy). Most buyers think and care little about the brands they buy – and even less about the brands they don’t buy.

Differentiation versus distinctiveness

Rather than aiming for meaningful differentiation, seek instead for distinctiveness (that may be free from meaning). We need to quickly establish a brand within consumers mind – and being distinctive helps make a brand salient.

There is little empirical evidence offered in text books that a differentiation strategy actually leads to brand growth (yet there is evidence that most brands in a category have similar rivals). Most people buy within a category for the generic benefits of that category – which everyone offers. Thus for many brands the areas of differentiation are marginal (and temporary) and thus have limited influence on purchase patterns.Often any differences are quite functional (e.g. American brands are perceived as American, and expensive brands perceived as expensive.

Likewise brand personality. The reality is users of different brands see them in the same way. It could be argued that brand personality is a misguided concept as few people imbue brands with human-like qualities (for example, only 3% of British consumers think their condiment is ‘charming’).

Brand

‘Trusted’

‘Efficient’

‘Rapport’

‘Relevant’

‘Solution’

‘Innovative’

‘Essential’

FedEx

95

94

84

79

69

60

39

Brand ‘A’

96

95

85

81

72

63

37

Nokia

96

83

75

67

65

89

22

Brand ‘B’

97

87

82

76

75

47

32

Brand ‘C’

94

78

72

70

75

54

46

Oracle

93

83

73

53

60

85

19

Brand ‘D’

94

90

85

58

81

66

23

AVERAGE

94

87

79

69

71

66

31

Source: Collins 2002

Marketers strive to create unique imagery for their brands. But a study of 130 brands in 13 product areas shows that people rarely (i.e. 3%) see a brand as exclusively owning a particular image or attribute. The more successful brands do not appear to have unique associations. The reality is they will all own the core attributes of that category.

Differentiation does exist. Every category will have brands that differ on the fundamentals of price and quality. But how important is differentiation? The fact that loyalty does not vary significantly between brands suggests it is not as important. Furthermore, if important, then surely we should see a matching with different consumer segment types (who may favour that point of differentiation)? But again we have found competing brands sell to very similar customer bases. Brands that are very differentiated should be selling to more discrete audiences – but this is not the case (as heavy category buyers in particular often buy a wide number of competitive brands).

The NBD-Dirichlet mathematical model assumes that brands compete as undifferentiated options – and this has been validated across many different studies on many different categories in many different countries. Net, brands are much more similar than we like to think. Differentiation as a concept is more important at a category level than a brand level (For example, KFC, McDonald’s and Pizza Hut all have minor differences from their respective main competitors (like Burger King, Dominoes etc), but are differentiated from each other in the competing fast food category). Differentiation is a concept that lives in theory but dies in practice. It’s not how the real world works.

So how do people really chose between branded options? Studies reveal that most people (i.e. average 89%) do not see their brand as being very different from its competitors. Even brands like Apple. 77% of its user base say they do not see it as different or unique from other brands. We may talk about Apple’s design, its user interface and different operating system, but for most people it still helps them look at things on the internet, send emails store photos, and write documents – like every other computer does. Thus, if they do not see these brands as being different, then it can’t play a big part in influencing their purchase.

In reality, most people do not need a point of differentiation to buy a brand (or keep on buying it). In many cases, brand choice can be a trivial decision, with little thought and gentle influence. People by and large do not spend a long time ‘comparing’ across brands. Hence many people do not really know the differences between brands (they know a little about the brands they use, and near nothing about the brands they do not use). This threatens many theoretical models on information processing (such as Alpert ’71, Fishbein & Ajzen ’75 etc.). Thus it is not essential for marketers to convince buyers that their product is different for them to buy it.

Category

Current users who perceive their brand as being DIFFERENT %

Current users who perceive their brand as being UNIQUE %

Spirits

20

27

Supermarkets

25

21

Skincare products

17

21

Ice-cream

14

11

Fast food

16

13

Banking

13

10

Soft drinks

11

9

Condiments

10

9

Ready sauces

9

7

IT

9

10

Soups

8

5

Yoghurt

8

5

Cars

9

6

Water

6

6

Electronics

4

6

AVERAGE

11

10

Source: Romaniuk, Sharp & Ehrenberg

Distinctiveness – an alternate perspective

Distinctiveness helps make a brand ‘stand out’ in our mind and memory. Of interest, there need not be any meaningful purpose of the point of distinction (as its role is merely to drive saliency).

Some elements that drive distinctiveness include colours (e.g. Vodafone red), Logos (e.g. McDonald’s arches), Shapes (e.g. Toblerone), Tag lines (e.g. Nike – Just do it), Symbols/ Characters (e.g. Micky Mouse’s ears), Celebrities (e.g. Tiger Woods for Nike), and advertising styles (e.g. Priceless campaign by Mastercard). When you have a distinctive feature it should be regularly featured in all communication material to install into long term memory. This also helps build a sense of familiarity, which creates an emotional reassurance of the brand (and this in turn helps nudge purchase). Since most brands have a long tail of irregular buyers, distinctivity helps bring the brand to mind, encouraging re- purchase. When a brand drifts into the deep recesses of the mind, the opportunity to be considered when the consumer buys into that category is diminished.

These points of distinction need to be learned by the consumer and this takes time (and consistent exposure). For example, Nike first introduced its ‘swoosh’ in the 1970’s.

How advertising really works

Fact: advertising works. If it didn’t then why would very smart organisations around the world spend 2% of the world’s GDP on it? 40 years of single source data (i.e data trains linked to individuals) from a wide range of categories has provided solid empirical evidence that advertising drives sales amongst those exposed to it. The reality is not every ad sells. – some copy is more effective than others (and it’s not necessary for that copy to be rational to be persuasive).

The increasing knowledge we have has helped us redefine some of the key principles of advertising:

From (old myths)

To (the facts)

Rational OR Emotional

Emotional AND Rational

Message comprehension

Getting noticed; Emotional response

Unique selling proposition

Relevant associations

Persuasion

Refreshing & building memory structures

Positioning

Saliency

Teaching

Reaching

Primarily, advertising works by creating and refreshing memory. Most decision- making is heavily influenced by emotions. Du Plessis states that emotional content in advertising helps gain attention. ‘Emotion’ also lifts the liking of ads (which in turn leads to greater attention (and increased branding) and from there, greater influence and sales).

Brand advertising affects the buying behaviour of consumers. It’s impact is long term, more subtle yet more effective than short term promotional driven advertising. That is because of two things:
1) The advertising effect is laid down thinly over a long period of time (especially for large brands as their ad spend is relatively small versus all the other ‘impacts’ the brand has due to its size). The effect is like the decent path of a plane – the higher it climbs, the longer its influence.

2) Most advertising just maintains market share (as few advertisers invest big enough to really shift the needle).

Most brands have a long tail of light users. The committed heavy users is so ingrained in their behaviour, that the advertising will have little impact. However, the advertising reminds those light users of the brand and so ‘nudges’ their behaviour (do not under-estimate the impact of a slight nudge on millions of potential customers). If a brand does not remind these light users, then the brand fades from memory (and is further pushed back by the advertising of other brands) and so is less likely to be used again. The bigger the brand, the more light users it has and hence the more money it needs to spend to reach them all (and so needs to use broad reach media rather than discrete channels).

Advertising needs to be processed (ideally consciously but can also be unconsciously) to build memory structures. The trouble with so much vying for attention, advertising’s first role is to cut through (hence the use of creativity). Emotion is the primary source of human motivation so engaging and evoking emotions is often critical in advertising.

The key way advertising works is by building (and occasionally refreshing) memory structures. This helps people more readily recall the brand, making it more top of mind (salience). Continual presence is more effective than short bursts of advertising as it stops these memory structures from fading away.

Rational advertising that tries to convince through providing some meaningful new information to persuade can work (but are often dry and so fail to cut-through). Rational messaging is better absorbed if wrapped in emotion (e.g. ‘Goodyear tyres reduce braking ability’ Vs ‘Keeps your loved ones safe’).

Net, use broad reach media, with emotional elements and aim for continuous exposure to build a brand.

What price promotions really do

Price promotions have an immediate and dramatic effect on short term sales. It is the easiest to change. But in most cases it is artificial and short lasting. Price promotion primarily rewards current users. They have not been shown to bring new users permanently into the brand.

Each brand has a ‘normal’ (expected price) to pay and most categories have pricing tiers – ranging from economy up to premium.The belief is some people are premium brand buyers and others want to buy as cost efficiently as possible. Research however suggests people buy across the pricing range, even within a category:

Buyers of…

%age buying cheapest instant coffee

%age buying regular priced instant coffee

%age buying premium priced instant coffee

%age buying most expensive instant coffee

Cheapest instant coffee

100

64

57

36

Regular priced instant coffee

69

100

51

30

Premium priced instant coffee

66

55

100

39

Most expensive instant coffee

78

61

73

100

Source TNS

For some brands, more than half its sales come from discounted prices (which raises the question, what is the real price of the brand?)

For retailers and many brands, promotions have become ingrained into their plans without any real thought to their impact. So why do brands run price promotions? The two most common reasons cited are to drive sales/profit and attract new users. Sadly neither of these are supported by empirical evidence.

Ehrenberg, Hammond and Goodhardt (1994) found that almost everyone who bought a brand during its promotional period had bought the brand previously (and so marketers have given away profit (because they would have bought it at the full price).

Furthermore, promotions tend to pull sales forward (so you get a dip in sales post promotion).

But does it bring back infrequent buyers? Price promotions do bring in a lot of infrequent buyers, but these buyers then drop back out afterwards.

Do they bring in new users? Promotions do jolt short term purchase but it does not change their overall buying profile.

So what is the average volume a brand can expect? Studies have found a fairly consistent level of price elasticity (i.e. the %age change in volume for a 1% change in price). Danaher & Brodie (2000) found a -2.3% across 26 categories – i.e. a 23% increase in sales from a 10% drop in price. Scriven and Ehrenberg (2004) found -2.6%, and Bijmolt, Van Heerde & Pieters (2005) -2.5%. These results can be exceeded if there is a relatively big price drop versus the competition, if the promotion is heavily promoted, or if the brand has a low share.

But does price promotions increase profitability? Even with large volume rises, it often does not contribute to extra profit. That is because by cutting the price, you cut the profit margin. For example, if a brand (with a margin of 50%), drops its price by 10% this will reduce its margin to 30%. A 25% drop in price would wipe out all profit on those extra sales. Clearly these breakeven levels depend on the brands margin:

For a brand with a 30% profit contribution margin

For a brand with a 40% profit contribution margin

For a brand with a 50% profit contribution margin

Price reduction %

Increase in sales needed to match the current contribution (%)

Increase in sales needed to match the current contribution (%)

Increase in sales needed to match the current contribution (%)

1

3

2

2

5

20

10

11

10

50

33

25

20

200

100

66

Source: Sharp 2010

One of the problems with regular promotions is the re-education of the consumer base into the ‘new reality’ of the price of the brand (making them actively reject the brand when not on promotion). Regular high visibility promotions then becomes another learned memory of the brand, encouraging some people to only buy when on offer.

Net, price promotion is costly. It does not bring in permanent new users and erodes (potentially forever) the brands margins. The only real benefit is for the retailer. The recommendation is to reduce the funding of price promotion to the minimum viable and move the funds instead into longer term brand building activities such as advertising.

Why loyalty programs do not work

The marketing ‘theory’ is if a brand can develop a closer, more empathetic relationship with its consumers and offering reward points for purchase then they will become more loyal to the brand.

However this basic premise may well be misguided as empirical evidence suggests it’s not working. Indeed, some companies are now winding down their investment in their loyalty programs.

The Ehrenberg-Bass institute studied loyalty programs in Australia and observed only a weak effect. In the study there were able to predict the likely level of loyalty a brand of each size would expect with no special activity. The results show only marginal differences versus no activity:

PREDICTED Penetration of a brand this size (with no activity)

ACTUAL Penetration (through loyalty program)

PREDICTED Average Purchase frequency of a brand this size (with no activity)

ACTUAL Average Purchase frequency (through loyalty program)

PREDICTED Sole buyers of a brand this size (with no activity)

ACTUAL Sole buyers (through loyalty program)

DEPARTMENT STORES (AUSTRALIA)

Kmart

52

48

3.4

3.7

7

10

Target

42

43

3.0

2.9

6

5

Myer

34

35

2.8

2.8

5

5

SUPERMARK ETS (AUSTRALIA)

Coles

64

61

9.4

9.8

3

5

Bio

60

58

8.9

9.1

3

3

PETROL RETAIL (AUSTRALIA)

Shell

51

46

5.8

6.3

10

11

BANK CREDIT CARDS (AUSTRALIA)

NAB

25

20

7.2

9.6

63

79

BNZ

28

27

7.9

8.1

80

79

PHONE CALLS

Telecom

85

86

24

24

87

88

AVERAGE

50

48

8.0

8.4

28

31

Source: Ehrenberg-Bass Institute

Loyalty programs fall into the same trap as price promotions do. Primarily it’s the regular users who see the benefit of it and sign up, whilst infrequent buyers are less likely to engage. And of course non-users rarely even know about it.

Category

Average Purchase Frequency of consumers who joined the loyalty program

Average Purchase Frequency of consumers who DID NOT join the loyalty program

Supermarkets

27

28

Petrol Retail

13

14

Department stores

10

9

Credit Cards

10

9

Telecoms

26

26

Average

15

15

Source: Ehrenberg-Bass Institute

Net, loyalty programs produce very slight loyalty effects and do little to drive actual growth. When you take into account the cost of running such programs, in most cases there will be a negative impact on profit. Probably their most productive role is in building a database for further analysis of buying habits.

Mental and Physical availability

One of the key principles in Marketing is to make a brand easy to buy. This requires not just mental availability (i.e. saliency) but also physical availability (i.e. distribution).

Mental Availability – Brands are a very small part of people’s lives. Furthermore, it’s a very cluttered world, with lots of ‘impacts’ from TV, digital, etc vying of your attention (c300 ads a day). The typical supermarket stocks over 30,000 products. We simply do not have the time nor capacity to assess every option, so our brains tend to ‘satisfice’ – i.e. find a brand ‘that will do’ rather than necessarily be ‘the best’. The greater the range of choice the more likely we will satisfice (as brand choice becomes increasingly difficult). Thus a lot of brand loyalty is passive not active. Instead buyers are active rejectors of other brands (as too complex/difficult to assess so chose not to consider them as their current choice is satisfactory). Our brains naturally screen out a lot of information that impinges on our senses. Therefore a brand has to do something spectacular to be noticed.

Academia assumes we make conscious decisions in our brand choice (based on brand features and brand image) from a wide array of possible options. Yet we know in practice this overstates the role of features and brand image. Buyers do not consistently recall the same things about a brand. Many other factors affect what we remember. Furthermore consumers do not survey all options on the market. Finally many other factors outside the brand features and image will influence decision- making. Sometimes a customer is feeling extravagant, sometimes frugal, sometimes patriotic. Thus there is less predicability in decision making than the academics and research companies suggest.

So why are some brands more popular than others? It’s to do with the fact that certain brands are recalled more easily than others. Since the biggest growth opportunity comes from light users and non users the key is to get these two groups to think of your brand more often.

In the brain there are nodes of information associated with the brand (e.g. McDonald’s will have hamburgers, the golden arches etc). These links keep being refreshed through experiences such as restaurant visibility, visiting, consuming, advertising etc. The more extensive and fresher the network of memory association about a brand, the greater the brand’s saliency. The more these memories can be triggered in everyday situations, the more likely the brand will be recalled. The more distinctive these brand assets, the greater the chance to stand out and be recalled.

Physical availability – Physical availability means making a brand easy to buy. Even if you recall it, if it is not on sale in the store (or out of stock) that potential sale is lost. It also includes hours of availability and ease of purchase (such as finance). The bigger the brand, the greater the likelihood it will be available everywhere.

Research has shown the key ways to help build mental and physical availability are: Broadening distribution, Gaining a new distribution channel, Consistent use of the brand’s distinctive assets, Broad reach media, Gaining shelf space, Broad range of product varieties, pack formats and sizes.

Coupons, price promotions, pack changes and loyalty programs are unlikely to build mental and physical availability.

Unknown or risky strategies include advertising that contains new information, competitions, temporary product variants and suspense advertising (where the brand name is hidden)

SUMMARY

The seven simple rules for marketing:

  1. Reach – Continuously reach ALL buyers of your category with both broad reach comms and physical distribution.
  2. Make it easy – Ensure the brand is made as easy to buy as possible – be it availability, delivery, parking, pack sizes, ease of finance etc.
  3. Get noticed – Be salient. Be distinctive. Use emotions.
  4. Build brand memory assets – We ignore things that do not fit our ‘map of reality’. When we try to re-position a brand, it takes a lot of investment to cut against the inertia of the past memory structures. Therefore it’s often more effective to work with what you already have. If you are launching new things, it is best to link it back to existing known concepts.
  5. Create and use distinctive brand assets – Brands helps us ‘short-circuit’ the laborious task of decision-making. But the brand must first be recalled. Distinctive brand assets (such as ‘The Jolly Green Giant’, The PG Tips Chimps, L’Oreal’s, ‘Because you’re worth it’ etc. all help provide memorable hooks that make the brand stand out and hence be recalled easier. If your brand does not have one, then it needs to create one (and then invest long-term behind it).
  6. Be consistent yet fresh – Remain faithful to the existing memory structures/ distinctive brand assets – and keep them fresh. You need to keep telling the old story time and time again – but in new and engaging ways. Likewise, avoid the common marketing temptation to change things.
  7. Stay competitive – don’t give a reason NOT to buy – A large part of selection is the process of de-selection (i.e. what you will not consider). A brand is easier to buy the more times it has been bought (and the more a brand gets rejected, the less likely it is to get bought). So be careful you do not start to create barriers to purchase (be it physical or mental availability or some features). A brand spends so much time focusing on why people should buy it, they forget to focus on what puts people off buying it.

CRITIQUE

This for me is one of the most important marketing books of the past decade. Clearly, its principles need to be validated for your brands and category.

One of the big areas I struggle with is the statistics – Mediums and averages always disguise the truth. For all brands there will be loyalist and advocates at one end and dismissers at the other. Thus we must be careful not to paint a picture of all brands and all consumers being the same merely because the way numbers work, will push everything back to the average.

If this was a ‘scientific’ paper I think there would be a cry for more evidence to really support his claim (and likely the need to ‘disprove’ any counter evidence). Thus I feel he has certainly opened up the debate about the need for more empirical evidence and challenged a large number of myths.

That said, I do notice I find it hard to accept some of the principles he challenges (maybe because I am so committed to those and so have convinced myself of their veracity). For example, the view about segmentation, and insights I find it hard to completely buy (and so challenge the maths to disprove his theory – because I do not want to believe it!). Likewise I notice there are some things I believe in (such as the greater power of TV versus social media) and so easily drift over the data without challenging it.

I therefore think we need to be ‘open’ to many of these challenges but also set up testing programmes to check some of these hypotheses for our own brands.

Brain for hire copy

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